What Is Share Premium

The amount that is over and above par value on the amount that has been subscribed to for a new issue of corporate capital.

What is share premium. The shares are said to be issued at a premium when the issue price of the share is greater than its face value or par value. Issuing shares at a premium is a commonly used practice as par value is often set at a minimum level and does not reflect the. Face value of a share is its value that is printed on the share certificate. Share premium is the amount received by a company over and above the face value of its shares.

The ending balance of the share premium account is recorded in the statement of financial position after the share capital. A share premium account appears on the balance sheet and is the amount of money paid for a share above the cost of the share. The amount of the premium is the difference between the par value and the selling price. A share premium account is a type of business account that is often included on a company balance sheet the purpose of the account is to provide a means of posting payments received by a shareholder for shares issued when those payments exceed the actual cost of the share.

Share premium is the difference between the issue price and the par value of the stock and is also known as securities premium. That part of shareholders funds shown separately on the balance sheet formed of the premium paid for new shares above their nominal value. It is a statutory reserve which forms part of a company s non distributable reserves. Share premium is the credited difference in price between the par value or face value of shares and the total price a company received for recently issued shares.

Share premium is the additional amount of funds received exceeding the par value of security. Share premium account companies act 2013 uses of share premium securities premium account companies act 2013 what are the purpose for which shares premium amount can be utilized uses of share premium account utilisation of share premium. For example face value of a 1 share is one dollar.