Multiple choice

A company issued 15, 000, 9% preference shares of Rs. 100 each at 5% discount and 2, 00, 000 equity shares of Rs. 10 each at 10% premium. Full amount was received from the applications in one installment. The net balance of securities premium account will be

  1. Rs. 75, 000

  2. Rs. 1, 25, 000

  3. Rs. 2, 00, 000

  4. cannot be determined
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

 According to Section 52 of the Companies Act,2013 Share premium can be used to write off any discount allowed on the issue of securities or debentures.Share premium                                                =Rs 2,00,000 Discount on issue of preference shares     =Rs(5%of 15,00,000)                                                                             =Rs 75000 Net Balance in Securities Premium A/c       =Rs (2,00,000-75000)                                                                             =Rs 125,000  

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