Issue of Shares for Consideration other than Cash

\[\text{Number of shares to be issued  =  } \frac{\text{Amount Payable}}{\text{Issue Price}}\]

A. On Purchase of Assets:

Sundry Assets A/cs (Individually)         ...Dr.

       To Vendor A/c

(Being assets purchased and vendor credited with the purchase price)

B. On Purchase of Business:

1. When Purchase Consideration > Net Assets (Goodwill arises):

Sundry Assets A/cs (Individually)           ...Dr.

Goodwill A/c                                           ...Dr.

        To Sundry Liabilities A/cs (Individually)

       To Vendor A/c

(Being business purchased and excess amount treated as goodwill)

2. When Purchase Consideration < Net Assets (Capital Reserve arises):

Sundry Assets A/cs (Individually)           ...Dr.

       To Sundry Liabilities A/cs (Individually)

       To Vendor A/c

       To Capital Reserve A/c

(Being business purchased and difference treated as capital reserve)

C. On the Issue of Shares to Vendor:

1. If Shares Are Issued at Par:

Vendor A/c            ...Dr.

       To Share Capital A/c

(Being shares issued at par to the vendor)

2. If Shares Are Issued at Premium:

Vendor A/c              ...Dr.

       To Share Capital A/c

       To Securities Premium A/c

(Being shares issued at a premium to the vendor)

D. Issue of Shares to Promoters for Services:

1. Expense Accounted as Goodwill or Incorporation Cost:

Goodwill A/c or Incorporation Cost A/c      ...Dr.

       To Promoters’ A/c

(Being services received from promoters)

2. Issuing Shares to Promoters

(i) If Shares Are Issued at Par: 

Promoters’ A/c           ...Dr.

      To Share Capital A/c

(Being shares issued to promoters at par)

(ii) If Shares Are Issued at Premium:

Promoters’ A/c           ...Dr.

       To Share Capital A/c 

      To Securities Premium A/c

(Being shares issued to promoters at a premium)

E. Issue of Shares to Underwriters (Underwriting Commission):

1. For Underwriting Commission Due:

Underwriting Commission A/c                 Dr.

        To Underwriters’ A/c

(Being commission payable to underwriters)

2. Discharge of Commission via Shares

(i) If Shares Are Issued at Par:

Underwriters’ A/c        ...Dr.

        To Share Capital A/c

(Being shares issued to underwriters at par)

(ii) If Shares Are Issued at Premium:

Underwriters’ A/c      ...Dr.

       To Share Capital A/c

       To Securities Premium A/c

(Being shares issued to underwriters at a premium)