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500,000 50c shares issued at $1.50 per share in exchange for shares in X..Double entry as follows:
Dr-Trade investment in X 750,000
Cr-Share capital account 250,000
Cr-Share premium account 500,000
Sir, i didn’t understand what kind of issue it..it is similar right issue but there is no increased cash…Does it mean that we buy other entity’s (X’s) investment instead of cash?Yes – they are buying X’s shares but instead of paying cash they are issuing new shares.
(So the entries are exactly the same as if they paid cash to buy the shares, and then received cash for the new shares issued. Since you would then be debiting and crediting cash with the same amount, the cash entries don’t appear.)
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