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Share Premium is a Capital Reserve. They cannot pay dividends because share premium is a non trading activity.
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∙ 10y ago
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Is share premium a capital reserve?
yes
Can revaluation reserve be use for bonus issue?
Yes it can use any of the capital reserves for the purpose, like Share Premium Account, Capital Redemption Reserve & Revaluation Reserve...
What is the effect of a bonus issue on the share capital and share premium account?
Bonus shares increases the share capital while reduces the share premium account because amount of share premium is used to issue bonus shares.
Is share premium paid part of paid up capital?
Yes share premium paid is part of paid up capital and shown separately as share premium account in equity section of balance sheet.
Example of capital reserves?
share premium
What is share premium reserve?
Share premium occurs when a company sells its shares at a price higher than face value, meaning it earned more money than the share is stated to be worth. This excess money is held in reserve in a share premium account, and it can be used to pay equity related expenses, such as underwriting, or to issue bonus shares to stockholders.
When calculating the cost of capital how should the share premium be calculated?
share premium could be calculated as by getting the difference between the market price of the share and its nominal price. Formula: Share Premium= Market Price - Nominal Price
Is share premium is part of paid up capital?
No, share value at par is considered while calculating paid up capital.
Can you use revaluation reserve to issue share capital?
yes, for a bonus issue
What is capital redemption reserves?
Capital Redemption Revere is an reserve created when a company buys it owns shares which reduces its share capital. This reserve is not distributable to shareholders and can be used to pay bonus shared issued.
What is the accounting entry to reduce a reserve account?
Reserve account can be reduce as follows: [Debit] Reserve account xxxx [Credit] Share capital account xxxx
What is working capital in a Bank?
Total of Share capital, reserves and other funds and deposits is working capital of the bank but less revaluation reserve.
