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All company’s stocks have a par or a face value assigned to them. It is also called the stock’s nominal value. Whenever stock is issued, it can be issued at a price above this nominal value. When the stock is sold at a value higher than the par value then it is said to be sold on a premium and the difference in the price between the issue price and the nominal value is called share premium. It is calculated as:
Share premium = Issue Price – Par value
The firms have a share premium account in which they list all the premiums that have been there in the past.
Share premium = Issue Price – Par value
The firms have a share premium account in which they list all the premiums that have been there in the past.
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If a share is issued on the higher price than the face value of it. The excess amount u pay, is called share premium.
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