Share issue expenses

Dear Sir/Expert,

kindly resolve following query.

A listed PSU was gone for Public issue Further Public Offer (FPO) recently, due to market conditions the issue was withdrawn back by compnay. now question is Expenditure was inccured by company for FPO issue how to account?  Company can adjust same FPO exp amount against the security premium amount already available ? or need to be charged to Profit and Loss account? suppose if the compnay already adjust against security premium amount what is next step to do if it wrong treatment? give suitable and supporting section for same.

Thanking you.

 

Replies (2)
Quick Summary
This discussion addresses the accounting treatment for expenses incurred on a withdrawn Further Public Offer (FPO). The consensus is that these share issue expenses should be expensed through the profit and loss account in the year they are incurred, as they are considered revenue in nature. If initially offset against security premium incorrectly, further steps will be needed to rectify the balance sheet.

In such a situation, share issue expenses are to be expensed out through the profit and loss account in the year in which the expenditure is incurred. ... Such a situation warrants the expenditure be carried in the balance sheet till it is written off.

It's a process chargges and revenue nature so p&L.

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