CAF-1 · Chapter 8 · Question 12 of 15
A company issues 1 million ordinary shares of Rs. 10 each at a price of Rs. 15 per share. How is the Rs. 5 per share excess recorded?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Credited to the share premium account.
Explanation
When a company issues shares at a price higher than their nominal (par) value, the excess amount is credited to a capital reserve known as the share premium account.
More Statement of Changes in Equity MCQs
- Q14Which of the following statements about irredeemable preference shares is true in the context of equity?
- Q15Transaction costs directly related to the issuance of new shares should be:
- Q1Which of the following is considered a 'revenue reserve' (distributable reserve) in the statement of changes in equity?
- Q2How should a final dividend declared just after the year-end be presented in the financial statements for that year?
- Q3Where must an entity present the amount of dividends recognized as distributions to owners during the period?