Shares issued for other than cash …
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Gaurav Seth 5 years, 4 months ago
When any asset is acquired by a company, the payment of purchase price may be made by the issue of shares or in cash to the vendor. When shares are issued against the purchase price, it is called ‘Issue of shares for consideration other than cash’. In other words cash is not received by the company against such shares. In this case shares are not issued to the public in general.
Such shares may be issued to the vendor either:
(i) At par or
(ii) At a discount or
(iii) At a premium.
Illustration:
(Issue of share against purchase of Assets). R.K. Ltd. purchased a building from Ravi for Rs 90,000 payable in fully paid shares of Rs 10 each.
Pass Journal Entries when:
(i) Shares are issued at par.
(ii) Shares are issued at 10% discount.
(iii) Shares are issued at 20% premium.
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