Question
A company came out with IPO at a price of Rs.55 each
for 50,000 shares with face value of Rs.10 each. It listed on the stock exchange at Rs.60. What amount will be reflected as paid-up share capital in the balance sheet of the company?Solution
The paid up equity share capital is reflected at face value. The issue price above face value is shown under securities premium account. The company has nothing to report in the balance sheet with respect to the price at which the share is listed on the stock exchange. As such, the · Equity share capital = 50,000*Rs.10 = Rs.500,000 · Securities Premium = 50,000*(Rs.55-10) = Rs.22,50,000
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