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underwriting commission

01 September 2018

if it is not specified in the problem of joint venture on which amount the under writing commission is to be charged then how the treatment of under writing commission be carried out?

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2 Replies

Yogesh Tirthani (Student) (292 Points)
Replied 01 September 2018

kindly share full details such as chapter no.1 or question no. ??????

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smita savale (3 Points)
Replied 02 September 2018

Gopal and Govind entered into joint venture agreement to undertake the subscripttion of 50000 equity shares of Rs 10 each issued by newly formed Limited Company at a premium of Rs 2 per share. The underwriting commission is 4% as provided in the articles.
Applications for 38000 shares were received from public and underwriters duly discharged this obligations by taking up remaining shares. Gopal and Govind contributed Rs 80000 each and deposited the same in joint bank account.
sundry expenses incurred out to the joint bank amounted to Rs 5000. The underwriting commission was received by a cheque.
At the end of the venture 10000 shares were sold by them in open market at Rs 14 per share and rest of the shares were taken up by them equally at cost.Profit of the venture was shared equally.
profit=? , commission=?