Why secutries premium account is credited

This query is : Resolved

pradeep kundnani (Querist)
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18 March 2013 hi,sir/mam
my dought is why secutries premium account is credited
we pass journal entry
sh allotment a/c...dr
To sh capital
To secutries account
what is logic behind that?
i mean we can credit whole amt in capital itself.

CA AYUSH AGRAWAL

CA AYUSH AGRAWAL (Expert)
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18 March 2013 Share Capital is What Which can't Exceed Authorised Capital.
That is Face Value.
But Security premium is Different, We Can Adjust Security premium for Buyback and Other Losses.
But Not Share Capital Amount.

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javad

javad (Expert)
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18 March 2013 The premium money is a extra amount collecting for issuing shares.

This is not a capital , while redemption we only repay the shares only with out premium money.

Hope u have cleared

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