Valuation of shares for funding

This discussion addresses how a private limited company should record a £1 crore funding round where 5% equity was issued. It clarifies that the authorised share capital must first be increased to accommodate the share transfer. The face value of the shares transferred (£5,000) is debited to the equity capital account, while the remaining amount (£99,95,000) is credited to the securities premium account. The journal entry for this transaction is provided.