[amp_mcq option1=”Payment of dividend” option2=”Writing off goodwill” option3=”Issue of fully paid bonus shares” option4=”None of the above” correct=”option3″]<\/p>\n
The correct answer is C. Issue of fully paid bonus shares.<\/p>\n
Share premium is the excess amount paid by a shareholder over the nominal value of a share. It is usually used to write off the discount on issue or to create a reserve for future share issues. However, it can also be used to issue fully paid bonus shares.<\/p>\n
A fully paid bonus share is a share that is issued to shareholders without any further payment being required. This can be done by using the share premium account. The issue of fully paid bonus shares increases the number of shares in issue and therefore the company’s equity. It also increases the earnings per share (EPS) of the company, as the earnings are now divided by a larger number of shares.<\/p>\n
The issue of fully paid bonus shares can be used to reward shareholders, to increase the liquidity of the shares, or to make the shares more attractive to investors. It can also be used to finance a company’s expansion or to repay debt.<\/p>\n
Options A and B are incorrect because share premium cannot be used for payment of dividend or writing off goodwill. Option D is incorrect because share premium can be used for issue of fully paid bonus shares.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Payment of dividend” option2=”Writing off goodwill” option3=”Issue of fully paid bonus shares” option4=”None of the above” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-45633","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"\n