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IPO

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › IPO

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by John Moffat.
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  • July 29, 2021 at 5:15 pm #629796
    padraigmc13
    • Topics: 15
    • Replies: 8
    • ☆

    Hi

    This may be off topic but i am confused with regards share capital, share premium and equity financing.

    For a company selling shares the value in excess of par is normally held in share premium account which is deemed non attributable. The share capital although nominal is also deemed non attributable.

    However in terms of equity financing and IPO’s , funds are used for expanision, PPE etc-what is the difference between both?
    Does the amount of the share premium in this instance go to cash?

    Thanks

    July 30, 2021 at 9:56 am #629834
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49617
    • ☆☆☆☆☆

    IPO’s are equity financing.

    The double entry is to debit cash with the amount received, and credit share capital with the nominal amount and share premium with the excess over nominal.

    It may help you to watch the free Paper FA (was F2) lectures on limited companies.

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