Share premium

People who are not engaged in professional accounting by their activity, sometimes can not independently interpret this or that economic term. Most understandable, when there is a concrete and clear example.

Therefore, in order to understand what is the share premium, we can consider the following situation. A company with an authorized capital of 100 thousand conventional units issues one hundred shares. Each share will have a nominal value of 1,000 conventional units. The stock market, however, can offer a higher price for shares. For example, one thousand ten conventional units, if investors expect the company to increase its profits. Therefore, the value of each share increases by ten conventional units. Thus, the share premium is one thousand conventional units. This is the simplified scheme.

The issue is called the issue of securities or money. The income thus obtained goes to the development of the chain of goods - money - goods and as a result leads to the development of the enterprise or the economy as a whole. But emissions must be made within acceptable limits. The income from securities can only be received by the joint-stock companies that issue shares. The enterprise, having received the share premium, sends it to the reserve fund or increases the total amount of the company's profit.

The economic dictionary so interprets the notion of share premium - this is the difference that exists between the price at which securities are sold and their nominal value. Securities are most often understood as shares. In accounting, the share premium proceeds through the articles of reserve capital and the debit of accounts for the recording of cash and other funds that are transferred to the company as payment for shares.

In practice, the issue income is the excess profit, which appeared after the joint-stock company placed its shares, less the costs associated with their sale. It appears with an additional issue of shares or with an increase in their face value; The difference that arises when selling securities whose selling value is higher than the nominal value.

Unlike the income from the issue of securities, additional capital is income generated from revaluation of property, growth in its value, values received by the enterprise free of charge, and other sources. Article "Additional capital" reflects the movement of capital, which occurs not only from the growth of the value of the enterprise's property, but also repayment of debt in foreign currency on contributions to the authorized capital. Immediately, the exchange rate difference is taken into account.

Banking funds include, in addition to additional capital, consisting of an increase in the value of banking assets, income from the issue of shares and the value of property received free of charge. This includes the reserve bank fund and other funds that the bank has the right to create in accordance with its constituent documents.

In the accounting reporting of additional capital, all the changes that occur are made, such as an increase (resulting from revaluation of the property) or a decrease in it. Part of the profit, remaining undistributed at the disposal of the organization, is taken as a reduction of additional capital.

If, when summing up the annual summary reports, the losses that require coverage are identified, then the profits received by the organization, the reserve fund, are used for these purposes. And also you can use the means of additional capital and authorized capital, the amount of which can be brought to the net assets of the enterprise.

Any organization that engages in commercial activities, in addition to income, also has mandatory items of expenditure, which include income taxes, it is paid according to the results of financial and economic activities. The RF Tax Code defines as an object of taxation any profits of the organization in their monetary terms, defined as income, minus the amount of expenses. Under costs, this means costs that arise in the production and sale of products, as well as non-operating expenses.