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What is the accounting entry of paid-in capital premium?
In accounting practice, when an enterprise receives the paid-in capital invested by investors, it is likely to generate a paid-in capital premium. How to make accounting entries when paid-in capital premium occurs?

How to calculate the paid-in capital premium?

When an enterprise receives the paid-in capital premium, its accounting treatment is as follows:

Debit: bank deposit

Loan: paid-in capital

Capital reserve-capital premium

In the process of financing, the capital invested by investors exceeds their registered capital, which is called capital premium.

For general enterprises, including limited liability companies, when receiving funds from investors, they should debit subjects such as "bank deposits" and "intangible assets" according to the determined value or the actual amount received, credit the subjects of "paid-in capital" according to the share of investors in the registered capital, and credit the subjects of "capital reserve" according to the difference between them.

What is the reason for the capital premium?

When a new investor joins the enterprise or undergoes debt restructuring, the amount of capital invested by the new investor is greater than the amount of capital invested by the investor at the time of the start-up of the enterprise under the same share ratio. Capital premium is the difference. The main reason for the capital premium is that when an enterprise is founded, the risk of investors investing in capital is much greater than that of those who join halfway, and the investment at the time of establishment has a more important impact on the enterprise. Therefore, in order to safeguard the rights and interests of the original investors, the amount of capital contribution paid by the new investors is much larger than that of the original investors, so that they occupy the same proportion.