- This topic has 1 reply, 2 voices, and was last updated 6 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- The topic ‘private company shares in exchange’ is closed to new replies.
OpenTuition recommends the new interactive BPP books for June 2024 exams, Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA LW Exams › private company shares in exchange
Hi Mike,
Here is a statement from the BPP Revision kit:
“A private company may allot shares for inconsiderate consideration by accepting goods or services at an over-value.”
What do they mean by “over-value’?
Thank you.
It means that the goods received were really not worth the value that had been placed upon them
For example, if a private company wishes to issue shares (say 1,000 $1 equity shares) in exchange for non-cash consideration (say a waste paper basket) then they may do so and the double entry would be:
Dr TNCA (waste paper basket) $1,000
Cr Share capital $1,000
Can you see that it has allotted shares by accepting goods or services that have been overvalued?
OK?