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CMA Intermediate · Corporate Accounting and Auditing · Issue, Forfeiture, Rights, Bonus, Sweat Equity, ESOP and Buy-back of Shares

Zenith Ltd issued 20,000 equity shares of Rs 10 each at Rs 14 per share, the full amount being received in cash. Under Section 52 of the Companies Act, 2013, what amount must be credited to the Securities Premium Account?

Rs 80,000 must be credited to Securities Premium Account. The premium is Rs 4 per share (issue price Rs 14 less face value Rs 10), and Section 52 requires the aggregate premium received on 20,000 shares to be transferred to that account.

  1. ARs 2,00,000
  2. BRs 80,000Correct
  3. CRs 2,80,000
  4. DRs 1,20,000

Explanation

Premium per share is 14 - 10 = Rs 4. Total premium = 20,000 x 4 = Rs 80,000, which must be transferred to the securities premium account. Rs 2,00,000 is the share capital, and Rs 2,80,000 is the total cash received.

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