It is contract between a company and other party, if public will not subscribe issued shares or debentures, underwriters will purchase.
They can charge commission in case of debentures up to 2.5% and shares 5%.
Marked applications:
If name of underwriter is shown by applicant against which he is applied known as a marked application.
Un Marked applications:
If name of underwriter is not shown by applicant against which he is applied known as a un marked application.
Marked applications will be directly credited to underwriter.
Unmarked applications will be credited in the gross liabilities ratio.
Firm under writing:
When underwriters purchase shares by themselves.
Credit is given – if firm underwriting is treated as a marked application.
Credit is not given – if firm underwriting is treated as a unmarked application.
What is the treatment of underwriting commission in statement of profit and loss account? Can it be treated as deffered revenue expense as per Companies Act 2013, Schedule III and Ind AS 32?
Please help me by providing answer.
Expecting a response
H C Gautam