Ordinary Shares

Code: 3210
👁 Views: 169

Account Information

Financial Statement Statement of Financial Position
Normal Balance Credit

Definition

Represents ordinary shares issued to shareholders, granting holders voting rights in general assemblies and equal dividend distributions.

Common Journal Entries

Issue new ordinary shares

Dr. Bank Account
Cr. Ordinary Shares

Issue shares with premium

Dr. Bank Account
Cr. Ordinary Shares
Cr. Share Premium

Issue bonus shares

Dr. Retained Earnings
Cr. Ordinary Shares

Buy back treasury shares

Dr. Treasury Shares
Cr. Bank Account

Issue new ordinary shares

Dr. Bank Account
Cr. Ordinary Shares

Issue shares with premium

Dr. Bank Account
Cr. Ordinary Shares
Cr. Share Premium

Issue bonus shares

Dr. Retained Earnings
Cr. Ordinary Shares

Buy back treasury shares

Dr. Treasury Shares
Cr. Bank Account

📐 IFRS vs US GAAP Accounting Treatment

IFRS IAS 1 Presentation of Financial Statements
US GAAP ASC 505 Equity
⚠️ Key Difference Between IFRS and US GAAP

GAAP makes extensive use of the par value system, while IFRS allows shares to be displayed at net received value (after deducting issuance costs).

❓ Frequently Asked Questions

Q: What are ordinary shares?

A: Represent ownership in the company, granting holders voting rights in general assemblies and a share in profits (dividends).

Q: How is the issuance of ordinary shares at par value recorded?

A: Dr. Bank Account (issue price), Cr. Ordinary Shares (par value), and Cr. Share Premium (if any excess).