Question

When Company issues the shares for consideration other than cash to the vendor from whom it has purchased assets. These shares can be issued at ______?

Options

• Par

• Premium

• Both par and Premium

• None of the above

Answer 1

Both par and Premium

Explanation:

In some cases, a firm will engage into an agreement with the vendors from whom it has purchased assets, in which the latter agrees to accept payment in the form of fully paid shares of the company issued to them. Typically, no cash is received for such share issuance. These shares can also be issued at par or at a premium, with the number of shares issued determined by the price at which the shares are issued as well as the amount payable to the seller.