Application Money

What is Application Money?

Application money refers to the amount an investor is required paying with the application for new issues – typically less than the total value of the shares in question, while the remainder being either partly or fully collected on the actual allotment. In case of partial allotment, there shall be a final call for the portion that is yet to be paid.

Simply put, it can be dubbed the money received by an organization from all applicants willing to buy its shares. It is, therefore, the total money received or collected in respect to an IPO (initial public offering) of shares. The amount can surpass or lag behind the actual amount anticipated by the company with regard to the number of shares floated.Ads by Google

It is worth mentioning here that to carefully and adequately record the application money in a balance sheet, is a mandatory requirement on the part of the company. Failure to do so may eventually lead to confusion and even misassessment of its financial standing.

Application money is best represented on a balanced sheet in various forms.

 

Edited and Updated 08th January 2014

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