Where equity shares are issued, the nominal value of the proceeds is credited to share capital. Any excess proceeds over share capital are credited to the share premium account. Expenses incurred in connection with share issues are debited to the share premium account.
The company measures investments at cost less impairment, including acquisition costs.
In accordance with the merger relief provisions of section 612 of the Companies Act, in the case of a group reconstruction, cost of investment in a subsidiary is measured at the nominal value of the shares issued to acquire the subsidiary, plus acquistion costs.
Loans advanced to group companies are recognised at the amounts advanced plus transaction costs. Subsequently, such loans are measured at amortised cost under the effective interest method.
Loans received from group companies are recognised at the amounts received, net of transaction costs. Subsequently, such loan are measured at amortised cost under the effective interest method.