Where is underwriting commission shown in the balance sheet? (2023)

  1. Home
  2. Blog
  3. Where is underwriting commission shown in the balance sheet?

Table of contents

  • Is it underwriting commission is a liability or asset?
  • When commission is due to underwriter underwriter account is?
  • What underwriting means?
  • Which type of expenditure is underwriting commission?
  • Related questions

Where is underwriting commission shown in the balance sheet? (1)

Is it underwriting commission is a liability or asset?

Underwriting commission paid on issue of debentures will appear in assets side of Balance sheet.

When commission is due to underwriter underwriter account is?

Answer: it will be credited as it is a liability for us because commission is due.Oct 17, 2020

What underwriting means?

Underwriting simply means that your lender verifies your income, assets, debt and property details in order to issue final approval for your loan. An underwriter is a financial expert who takes a look at your finances and assesses how much risk a lender will take on if they decide to give you a loan.

Which type of expenditure is underwriting commission?

access,2,account,86,accountant,94,Accounting,680,accounting definitions,99,accounting ebook,3,Accounting education,85,Accounting Education Ads Help,1,accounting procedure,2,accounting process outsourcing,2,Accounting Software,52,advance,3,advertising,6,africa,7,Amalgamation,6,amendments,16,announcements,62,Annuity,2,assets,52,audit,46,auditing,41,Australia,2,B.Com.,22,balance sheet,84,bank,111,Bank reconciliation,12,banking,33,basic accounting,110,BBA,1,benefits,13,best,50,bill,12,black money,3,blog,12,bloggers,7,book keeping,4,bookkeeping,2,Branch Accounting - full tutorial,8,budget,35,Budget variance,13,business,65,businessman,9,CA,30,calculator,4,canada,3,capital,72,capital budgeting,27,career,21,cash,40,cash book,8,cash flow statement,11,Chiense,1,children,13,china,6,class,3,coaching,2,coins,2,college,6,commerce,10,commerce students,7,company,36,computer,9,computer accounting,1,conference,4,Contact vinod kumar,1,Control Your Spending,27,corporate accounting,69,cost,160,cost accounting,195,cost center,8,cost centre,1,CPA,2,credit,18,credit card,11,cs,10,currency,35,data,11,Debit and credit,17,debit cards,1,debt,62,debtor,21,degree,6,depletion,2,depreciation,38,Diwali Messages,12,documents,4,dollar,5,domain,3,Downloads,3,Dubai,1,e-accounting,17,earning,17,education,247,Education Loans,6,email,15,employee,4,EPF,2,ERP,7,euromoney,1,examination,7,excel,17,excise duty,6,expenses,65,facebook,7,factor of loan,1,fans,2,feature,32,fifo,5,FII,4,fiji,1,finacle,1,finance,823,Finance Journal Entries,4,Financial,134,financial accounting,145,Financial Statements,2,fire insurance,3,flickr,2,flow,4,forensic,4,forex,21,formula,8,france,1,fraud,6,free,2,fun,34,function,1,fund,48,GAAP,36,GDP,1,gdr,5,germany,1,gold,7,goodwill,4,goodwill accounting,3,google,34,google apps,3,google apps,1,google base,1,google buzz,1,google calendar,1,Google docs,38,google finance,3,google fusion tables,1,google talk,5,govt.,5,GST,33,guide,85,health,6,Hindi,2,Hindi Language,3,history,3,holding company,3,How to treat FBT in Tally 9,1,HRA,3,ICAI,11,ICAWI,3,ICICI Bank,1,IFRS,10,income,17,income statement,17,Income Tax,7,India,57,indian railway,1,Indonesia,1,inflation,4,inflation accounting,3,infographics,8,information,7,inspiration,176,insurance,14,insurance accounting,2,Intangible,3,interest,26,international,7,Internet,41,Introduction of Tally 9,1,inventory,41,investment,135,investment in Shares,6,invoice,3,IT,1,Japan,1,Job costing,4,journal entries,140,Journal Entries eBook Help,4,Kalculate,1,keyboard,3,kuwait,2,laptop,2,law,4,LBT,1,learning,36,lease,5,lecture,11,ledger,17,leducation,1,Leverage Analysis,7,liabilities,16,lifo,3,linkedin,1,loan,74,logical point,1,loss,5,loss of profit,1,M.Com.,5,m.phil,2,malaysia,3,management accounting,129,manual accounting,4,manufacturing account,1,market,11,marketing,3,mastercard,2,material,13,MBA,14,MCA,1,media,4,migration,2,mobile,9,money,61,ms word,3,ms. excel,14,multi currency in tally 9,1,Multicurrency Accounting,3,mutual fund,30,national security,1,new and sacrifice ratio,1,new york times,1,new zealand,1,news,1,NGO,5,nonprofit-accounting,6,North Georgia Mountains,1,Notification,1,NPV,17,NSE,1,odbc,2,office,10,oman,1,online application,2,online accounting,11,Online Accounting Course,5,otcei,1,pakistan,3,parents,3,Partnership,1,pay pal,3,pdf,4,Personal Finance,6,pie chart,1,pie chart of income,2,pnb,5,podcast,1,ppf,1,presentation,10,price,7,privacy policy,2,prof. vinod kumar,13,profit,24,profit and loss account,12,project management,11,provision,13,purchase,9,puzzles,2,quickbooks,2,Quote,22,quotes,42,quotes of svtuition,1,rating agency,2,ratio analysis,34,RBI,7,readers,13,real estate,13,rectification of errors,11,remote control,2,reports,10,reserves,8,responsibility accounting,4,retirement,2,revenue,3,Revenue reserves,2,review,7,risk,11,rupees,9,salary,5,sale,12,SAP,3,saudi arabia,1,saving,19,sbi,9,scholarship,2,school,1,SEBI,13,security,30,service tax,23,share,20,share trading,15,Shares,16,shri lanka,3,singapore,2,sms,6,social accounting,7,society,5,solution,218,South Africa,1,stock,24,stock exchange,22,structure,6,student,39,students,70,study,21,subsidiary company,2,svtuition,14,swiss bank,2,tally,100,tally 9,8,Tally 7.2,8,Tally 9,42,Tally.ERP 9,59,TallyPrime,1,tanzania,2,tax,94,Tax Accounting,30,TDS,15,teacher,62,teaching,112,technology,33,test,40,testimonial,15,testimonials,15,thailand,1,tips,60,trading,5,trading on equity,2,transaction,7,trend,12,trial balance,14,truthfulness,1,tuition,3,twitter,10,UAE,5,UGC - NET Commerce,13,UK,11,United Arab Emirates,1,university,9,usa,25,valuation,8,VAT,22,Video,36,Voucher and vouching,4,Wealth,8,wikipedia,25,working capital,29,youtube,14,

Where is underwriting commission shown in the balance sheet? (2)

Where is underwriting commission shown in the balance sheet? (3)

(Video) Underwriting - Journal Entries in logical way - of Underwriting Commission

Share this Post:

What is underwriting commission with example?

It is calculated as a discount from the price of the new issue. For instance, an issuer may sell the underwriter a bond at $90 per bond. The underwriter will then place the issue at $100, thus allowing it to make a $10 profit. This profit is the underwriting commission. Underwriting commission is also called a concession.

Legal Definition list

Related Legal Terms

  • 9/11 Commission Act
  • Adjusted Underwriting Profit
  • Advanced Life Underwriting
  • Affiliate of a Futures Commission Merchant, Commodity Trading Advisor, Commodity Pool Operator or Introducing Broker
  • Agreement on Border Environment Cooperation Commission
  • Alaska Nanuuq Commission
  • Alcohol Beverages Control Commission (ABCC)
  • Alert [Nuclear Regulatory Commission]
  • American Battle Monuments Commission
  • Analytical Run [Nuclear Regulatory Commission]

What is underwriting commission in shares?

The company undertakes to pay an underwriting commission for the services rendered by the underwriters. According to Companies Act, underwriting commission should not exceed 5 per cent of the nominal value of a share and 2½ per cent in the case of debentures.


A brokerage contract is different from an underwriting contract. A broker undertakes only to find buyers who are willing to buy shares and debentures and does not guarantee the sale of a specified number of securities (shares, debentures). Thus, if shares and debentures could not be sold by the company, the broker will not buy the securities which have not been subscribed for.

Illustration 1:

Morrel Ltd. issues 10,000 equity shares of Rs. 100 each at par and 500 debentures of Rs. 1,000 each @ Rs. 950. The entire issue has been underwritten by Kapoor and Co., for a commission of 4 per cent on shares and 2 per cent on debentures (nominal value). The entire lot of shares was taken but only 400 debentures were applied for. All applications were accepted. Give journal entries and show the entries in the balance sheet, assuming all amounts have been received.

What is underwriting commission in accounting?

Underwriting commission is the compensation an underwriter receives frominvestors for placing a new issue. This is the fee paid to an underwriting firmor individual by the issuer company to subscribe to a security issue. Even ifthe company does not have to buy any shares, the fee is paid as a return on theimplicit risk that the underwriting contract implies. In the legal structure ofthe United States of America, Underwriting Commission is measured as a refundfrom the new issue's amount.[23]

An issuer can, for example, sell a bond to theunderwriter at $90 per bond. The underwriter then positions the problem at $100,thereby enabling it to make a profit of $10. The profit that is made is rightlycalled as Underwriting Commission. As provided for in Section 40(6) of theCompanies Act, 2013[24], an issuer company can pay the Underwriting Commissionto any individual or underwriting firm in connection with subscribing to itssecurities subject to such conditions as may be specified.

Is underwriter commission an expense?

Underwriting expenses are primarily associated with insurance companies as the cost of doing business, which is underwriting insurance policies. For an insurer, underwriting expenses may include direct costs, such as salaries, commissions, actuarial reviews, and inspections, as well as indirect costs, such as accounting, legal, and customer service expenses.

For an investment bank, underwriting usually relates to the process of underwriting securities for a company's initial public offering (IPO). Underwriting expenses would include such costs as due diligence activities, research, and legal and accounting fees.

Underwriting Expenses and the Expense Ratio

For insurance companies, calculating the expense ratio allows for it to determine the portion of insurance premiums (revenue) that must go towards paying underwriting expenses. The expense ratio for an insurer is obtained by dividing underwriting expenses by premiums for a given period. Since the profitability of an insurer has an inverse correlation with the expense ratio, insurers strive to keep this ratio in check in order to remain profitable.

(Video) Concept of Underwriter Commission | Shrinivas Bhatt | Offclasses

What is under written commission?

... but your computer or network may be sending automated queries.To protect our users, we can't process your request right now.

When commission is paid to underwriters which account is debited?

Answer: Underwriting commission is an expense and it is debited to (a) underwriting comission A/c.Dec 28, 2020

What is underwriting commission in cash flow statement?

Payment of underwriting commission is shown as an outflow of cash under financing activites.

It should not be noted that Underwriting Commission is written off in the Financial Statements from Securities Premium Reserve if it exists or from Statement of Profit and Loss.

When Securities Premium Reserve is not given in Question

Read More:- Treatment of Interim Dividend in Cash flow statement

Read More:- Treatment of Preliminary Expenses in Cash Flow Statement

In this case, Underwriting Commission is added to Net Profit before tax and Extraordinary Items to calculate Cash flow from operating activities.

Further, it is subtracted as outflow under Financing Activity.

When Securities Premium Reserve is given in Question

Let’s understand in two cases.

Case – I

(Video) Underwriting Commission - CS | CA - Inter l Company Law | Video Lecture

When securities Premium Reserve is less than the Underwriting Commission.

Let’s say, Underwriting commission is ₹ 5000 and Securities premium Reserve is ₹ 3000.

Do underwriters earn commission?
  • The average salary for an Underwriter is $61,295 Base Salary $44k - $90k Bonus $1k - $13k Profit Sharing $690 - $8k Commission $1k - $44k Total Pay $41k - $95k Based on 2,206 salary profiles (last...

What happens during the underwriting process?
  • Debt-To-Income Ratio. They’ll investigate borrowers’ debt-to-income ratio,which is the amount of debt you have compared to how much money you earn each month.

  • Credit Score. They also look at your credit score and history to determine whether or not you’re likely to make your payments on time.

  • Employment History and Income. ...

  • Appraisals. ...

  • Down Payment. ...

What is the role of underwriter in underwriting?
  • Collect,review and analyze an applicant’s relevant history and records

  • Obtain additional information about an applicant to determine coverage needs

  • Determine the level of risk for insuring or lending

  • Offer recommendations on whether or not to approve an application

  • Help agents determine premium costs


What does an underwriting agency do?
  • Income. Your underwriter needs to know that you have enough income to cover your mortgage payments every month.

  • Appraisal. Appraisals are almost always required when you purchase a home. ...

  • Credit. An underwriter also evaluates your credit score. ...

  • Asset Information. ...

March 14, 2023 How big is a 10 mm tumor?
March 13, 2023 How many weekdays are in a year in 2022?
March 13, 2023 How long does MoneyKey take to deposit?
March 14, 2023 What is a federal Schedule 3?
March 13, 2023 What are quality standards?

Recent Posts

How does MLS work?

Read More

¿Cómo comprar en línea en Walmart?

Read More

How much does Microsoft Flight Sim cost?

Read More

Who owns Oasis Financial?

Read More

What does exactly my sentiment mean?

Read More

(Video) #4 Underwriting of Shares - Problem 2 -By Saheb Academy ~ B.COM / BBA / CMA


(Amit Zodgekar)
2. #1 Underwriting of Shares - Concept - Corporate Accounting -By Saheb Academy ~ B.COM / BBA / CMA
(Saheb Academy)
3. Lecture #4 | Issuance of Share | Under Subcriptions | Underwriters & Underwriting commission
(Amjad Niaz's Academy)
4. #2 Underwriting of Shares - Problem 1 -By Saheb Academy ~ B.COM / BBA / CMA
(Saheb Academy)
(Free CA Coaching)
6. Underwriting Commission Basic Lecture
(Dhyan Commerce Group Tution)
Top Articles
Latest Posts
Article information

Author: Otha Schamberger

Last Updated: 15/03/2023

Views: 6014

Rating: 4.4 / 5 (55 voted)

Reviews: 94% of readers found this page helpful

Author information

Name: Otha Schamberger

Birthday: 1999-08-15

Address: Suite 490 606 Hammes Ferry, Carterhaven, IL 62290

Phone: +8557035444877

Job: Forward IT Agent

Hobby: Fishing, Flying, Jewelry making, Digital arts, Sand art, Parkour, tabletop games

Introduction: My name is Otha Schamberger, I am a vast, good, healthy, cheerful, energetic, gorgeous, magnificent person who loves writing and wants to share my knowledge and understanding with you.