Entry for purchase of share on premium

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This discussion clarifies how to account for shares purchased at a premium. When shares are bought for more than their face value (e.g., Rs. 1,200 for a Rs. 1,000 face value share), the premium amount needs to be recorded correctly in the accounts. The advice given is that if shares are purchased from the market, the Cost of Acquisition (COA) will be the actual purchase price of Rs. 1,200.

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(Querist)
11 October 2022 Dear Sir,

We bought few shares on premium i.e. Face Value of each share is Rs.1,000/- and we bought each share at Rs.1,200/-. Could you please guide me in passing an entry for the premium amount.

Thank you.
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Dhirajlal Rambhia

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Dhirajlal Rambhia (Expert)
11 October 2022 If purchased from market then COA will be Rs. 1200/- only.
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ABDUL SALAM

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ABDUL SALAM (Querist)
12 October 2022 Thanks a lot for the education Sir...
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Dhirajlal Rambhia

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Dhirajlal Rambhia (Expert)
12 October 2022 You are welcome ...
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