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Issue of Shares for Consideration Other Than Cash

Every company will issue shares for cash in order to meet its capital requirements. Sometimes, a company may issue shares in direct exchange of an asset or towards payment for goods supplied or services provided by vendors, professionals, promoters, etc. Such an issue is called an issue of shares for consideration other than cash. In the balance sheet, these shares should be shown separately. The following journal entries must be passed when shares are issued for consideration other than cash:

Illustration 12


A Ltd. was incorporated with an authorized capital of ₹ 1,50,000 divided into 15,000 shares of ₹ 10 each. The issued and paid-up capital of the company was ₹ 1 lakh. During the year, it issued 1,000 shares of ₹ 10 each to promoters for no consideration. Also, the company issued 500 shares to a vendor on the purchase of machinery. Journalize these transactions and prepare a balance sheet abstract as on 30th September 2012.



In the Books of A Ltd.

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