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May 2012

Section A : Accountin g Treatment for Share Issue and IPO-related expenses

By Himanshu V. Kishnadwala, Chartered Accountant
Reading Time 2 mins
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Bajaj Corp. Ltd. (31-3-2011)
From Significant Accounting Policies:

Initial Public Offer (IPO) Expenses: All the IPO expenses amounting to Rs.1,896.25 lac are written off during the year and shown as exceptional item in the Profit & Loss Account.

IndoSolar Ltd. (31-3-2011)

From Significant Accounting Policies and Notes to Accounts:

Miscellaneous expenditure: Until 31st March 2010, the Company had an accounting policy to amortise share issue expenses over a period of 5 years. The share issue expenses amounting to Rs.308,863,060 incurred during the year and the balance of Rs.26,960,927 remaining unamortised as at 31st March 2010, has now been adjusted against the Securities Premium Account as permitted u/s.78 of the Companies Act, 1956, on account of a change in the accounting policy in the year ended 31st March 2011. Had the Company continued to follow the same accounting policy, the miscellaneous expenditure written off and the net loss would have been higher by Rs.34,778,485 for the year ended and miscellaneous expenditure would have been higher by Rs.301,045,502 as at 31st March 2011.

Subex Ltd. (31-3-2011)

From Significant Accounting Policies:

Preliminary and Share Issue Expenses: Expenses incurred during the Initial Public Offer, follow on offer and issue of Bonus Shares are amortised over 5 years. Other issue expenses are charged to the securities premium account.

 Kingfisher Airlines Ltd. (31-3-2011)

Deferred revenue expenses: Share issue expenses are amortised over a period of three years on a straight-line basis following the year of incurring the expenses.

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