Premium Essay

Df Fdf Fdfdfd

In: Business and Management

Submitted By testrajiv
Words 6834
Pages 28
Issue of Shares

MODULE - 5
Accounting for Shares and Debentures

23
ISSUE OF SHARES

Notes

In the preceding lesson you have studied about the company, its meaning, characteristics and its various types. You are also familiar with share capital, and its various kinds. Share capital is one of the main sources of finance for a company. In this lesson we shall study the procedure of issuing shares for raising capital and its accounting treatment in the books of the company.

OBJECTIVES After going through this lesson you will be able to explain the procedure of isssuing shares; explain that the share money may be called in lump sum or in two or more instalments; state that shares may be issued at par, at premium, and at discount; make journal entries to record the isssue of shares; explain the terms calls in arrears and calls in advance. 23.1 PROCEDURE OF ISSUE OF SHARES Face value of a share is the par value of the share. It is also known as the Nominal value or denomination of a share. To issue shares a company follows a definite procedure which is controlled and regulated by the Companies Act and Securities Exchange Board of India (SEBI). There are different ways of issue of shares which may be: (A) For consideration other than cash (B) For cash (A) Issue of shares for consideration other than cash Sometimes shares are issued to the promotors of the company in lieu of the services provided by them during the incorporation of the 255

ACCOUNTANCY

MODULE - 5
Accounting for Shares and Debentures

Issue of Shares compnay. The issue price of these shares is normally debited to ‘Goodwill A/c’ and journal entry is made as follows : Goodwill A/c To Share Capital A/c Dr

Notes

In case a company does not have sufficient funds for the purchase of fixed assets or for payment to creditors it may offer and allot its shares to vendors/ creditors in lieu

Similar Documents