The Par Value of a Share Used to Be a Consideration

question 2

Multiple Choice

The par value of a share used to be a consideration when issuing shares in Australia.What is a par value? And if Exceed Ltd issues shares with a $1 par value for $5,how would the difference in these amounts be treated?

• A) The par value is the last sales price for the company's shares before the new issue. The $4 difference would be treated as a general reserve.
• B) The par value is the nominal value of the share. The $4 is a share premium.
• C) The par value is the minimum price that has been paid for the share over the last reporting period. The $4 difference would be treated as a profit on issuing the share.
• D) The par value is the amount specified in legislation at which all Australian companies were required to issue shares. The $4 difference would be treated as an unrealised gain on issuing the shares.
• E) None of the given answers.

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Definitions:

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