Shares Issue Accounting

Shares Issue Accounting

Shares issue increases the equity of the company. The share issue may be classified into

•  Issue at Nominal Price
•  Issue at Premium
• Issue at Discount

Nominal price of share are decided by regulator, while issue price of share is decided by the company, which may be lower (Issue at Discount) or higher than nominal price (Premium Issue). This concept has been explained with examples

1.    Issue of Share at Nominal Price

Shares are issued at nominal price (face value of share). 1000 Share issue @ nominal price of 10 Rupees each will be recorded as under.

Date	Particulars	Dr.	Cr.
	Cash	10,000
	Share Capital		10,0000

 

2.    Issue of Share at Premium Price

When shares are issued at higher price than nominal price, then such issue is called premium issue. Main reason of issuing share price at premium is market value of shares. 1000 shares issued for 12,000 and each share have nominal price of 12.

Date	Particulars	Dr.	Cr.
	Cash	12,000
	Share Capital		10,0000
	Share Premium		2,0000

3.    Issue of Share at Discounted Price

When Share is issued at price lower than nominal price, then such issue is called share price issue at discount. Main reason of issuing share at discount is lower market price of share than nominal price. For example 1000 Share having nominal value of 10 are issued at 8 Rs.

Date	Particulars	Dr.	Cr.
	Cash A/c	8,000
	Discount A/c	2,000
	Share Capital A/c		10,000