How is the issuance of stock for cash recorded? How is the issuance of stock for...

How is the issuance of stock for cash recorded? How is the issuance of stock for assets other than cash recorded?

Expert Solution

ANS: Stock means Common stock or equity shares. Shares can be issued at par value, discount or premium

In books of accounts any transaction is recorded via Journal Entries, which is further posted to Ledger then Trail balance & finally to Balance sheet

Journal Entry of Issue of Stock for cash

Particulars	J.V	Debit	Credit
Cash A/c Dr.
To Share Capital
Being Shares are issued

Note: If Shares are issued at premium or discount then respective gain or loss shall be recognised.

If the Company issues shares for Non-cash assets, then company has to decide at which value shares shall be recorded. As per Accounting Standards Shares in this case shall be recorded at Market value (in case of trading of shares) / Fair market value (in case no trading of shares) of shares or Market value of Assets received - which ever is clearly evident.

journal Entry for issue of Shares for assets other than stock

Particulars	J.V	Debit	Credit
Non-cash Assets A/c Dr.
To Share Capital
Being Shares Issued

jeff jeffy answered 1 year ago

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