Which of the following effects will the issue have?

This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.

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March 11, 2015 at 5:32 pm #232043
Quốc Anh
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I understand that when we have a right to issue shares, it means that asset will increase. So, how about the investment? Is issued share effective to the amount of investment?
March 11, 2015 at 7:35 pm #232065
John Moffat
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What you mean by saying that ‘the asset will increase’? Which asset?

If you are talking about a rights issue of shares, then this is an issue of new shares to existing shareholders. When the shares are issued, the entry is to debit cash and credit share capital.

I do suggest that you watch the free lecture on company accounts.
March 12, 2015 at 2:54 pm #232149
Quốc Anh
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Yes, i mean like what you say is that when the share are issued, the entry is to debit cash and credit capital.
Anyway, thanks for your help.
March 12, 2015 at 3:10 pm #232158
John Moffat
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I think I understand what you were asking now.

The entry is to Dr cash with the proceeds; Cr Share capital with the nominal value of the shares; and Cr Share premium with any extra over the nominal value.
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