ACCA LW · Chapter 9 · Question 5 of 11
A company issues 10,000 shares of nominal value 1 each for 2.50 per share, paid in cash. What amount must be credited to the share premium account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 15,000
Explanation
The share premium is the excess of the issue price over nominal value. Working: premium per share = 2.50 - 1.00 = 1.50; total premium = 10,000 x 1.50 = 15,000. The 10,000 nominal value is credited to share capital, and the full 25,000 is the total cash received. Under s610 Companies Act 2006 the premium must be transferred to a share premium account.
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