Share premium account
Share premium is the excess of the issue price over nominal value on shares issued, recorded within equity. The premium arises on the company's own share issue, not from a later trade between investors. It is presented within equity and movements appear in the statement of changes in equity. Legal restrictions on its use depend on the applicable jurisdiction.
Worked example
1,000 shares of nominal value 1 issued at 3 create share capital 1,000 and share premium 2,000.
Common mistake
A later change in the market price of existing shares does not create share premium for the company.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |