Premium received on issue of shares are shown under the head _________ in Balance Sheet.

A. Reserve and Surplus

B. Current liabilities and Provisions

C. Share Capital

D. Contingent Liabilities

Solutions

Expert Solution

Correct option is A)

Irrespective of the fact that shares have been issued for consideration other than cash, they can be issued either at par or at premium. The issue of shares at par implies that the shares have been issued for an amount exactly equal to their face or nominal value.

In case shares are issued at a premium, i.e. at an amount more than the nominal or par value of shares, the amount of premium is credited to a separate account called ‘Securities Premium Reserve Account’ under the head Reserves and surplus in the balance sheet.

Correct option is A)

Junaid answered 1 year ago

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