Wednesday, September 3, 2014

SHARE APPLICATION MONEY

HARE APPLICATION MONEY, is that money received by a company during an Intial Public Offer(IPO). Payments received for a subscription of stock or share is normally received over the IPO life. For example: ABC Limited has been registered with an authorized capital of $5,00,000 divided into 5,000 shares of $100 each of which, 2,500 shares were offered for public subscription at a premium of $5 per share, payable as:
·         On. application $10
·         On. allotment $25 (including premium)
·         On. first call $40
·         On. final call $30
 total of, $105/share

The amounts received would be known as a current liability until such time as the stock is issued, then it would be considered as part of equity.

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