Question

Under which Sub head we show the Security Premium in Balance Sheet ?

• A. Reserve and Surplus
• B. Share Capital
• C. Equity Share Capital
• D. Shares and Liabilities

Hint:

Security Premium is different from Share Capital; Share Capital is the aggregate amount received to issue the shares by the firm.

Answer 1

The Correct Option is A

Understanding Security Premium and Balance Sheet Presentation:
Security Premium refers to the excess amount received by a company over the face value of its shares. It represents a capital profit and is treated carefully in financial reporting.
Balance Sheet Classification: Security Premium is categorized under the "Equity and Liabilities" side of the balance sheet, specifically under the sub-head "Reserves and Surplus."
This sub-head includes all items that represent accumulated profits, capital reserves, and amounts set aside for specific purposes, making it the proper location for Security Premium.