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Should the share premium be regarded as part of the paid up capital of the firm?
Wiki User
∙ 16y ago
That part which has been paid should. Shares are sometimes issued and then called in stages; the full issue amount can be paid in installments. If shares are issued and part paid, the unpaid part is (obviously) not paid up.
Perhaps the answer you are looking for is the fact it is Share Premium, rather than Nominal, makes no difference. (In fact, the premium bit is more or less meaningless. It just reconciles issuing 10p nominalm shares for (say) £1.00. They are 10p nominal shares with a 90p premium rather than £1.00 shares. If there is a subsequent rights issue at (say) £2.00 per share, each will have a £1.90 premium.
The only values that really mean anything are the issue amounts of £1.00 and £2.00 (real money changes hands). The rest are paper numbers.
Neither says anything about value; that is determined by demand and supply on the stock exchange.
Wiki User
∙ 16y ago
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Is Share premium as capital or revenue reserve?
Share Premium is a Capital Reserve. They cannot pay dividends because share premium is a non trading activity.
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
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
Is share premium a capital reserve?
yes
Why shares issued at premium?
In case the shares have been issued at a premium and the amount of premium has been received then at the time of forfeiture of such share (a) share premium account should be debited (b) share premium account should be credited (c) share premium account should be neither debited nor credited (d) none of these
Issuing share at premium?
In case the shares have been issued at a premium and the amount of premium has been received then at the time of forfeiture of such share (a) share premium account should be debited (b) share premium account should be credited (c) share premium account should be neither debited nor credited (d) none of these
Is share premium is part of paid up capital?
No, share value at par is considered while calculating paid up capital.
What type of account is paid in capital in excess of par?
Paid in capital in excess of par is called "Share premium account"
How do you prepare a double entry 4 a share capital and share premium account?
1. When cash received[Debit] Bank/Cash xxxx[Credit] Share application xxxxwhen shares allotted[Debit] Share application xxxx[Credit] Share capital (face value) xxxx[Credit] Share premium [value above face] xxxx
Why capital is a liability?
I dont rregard it as a liability because as this money cannot be called up by share holders how could it be regarded as capital can any one answer it?
