Lagos Retailers Plc issued 5,000,000 ordinary shares of ₦1 each at ₦3.50 per share on 1 March 2023. Issue costs of ₦2,500,000 were incurred. Under IFRS (IAS 32), how should the issue costs be treated in the Statement of Financial Position?

Under IAS 32 paragraph 37, transaction costs directly attributable to the issue of equity instruments are deducted from equity, net of any related income tax benefit. The share premium arising from the issue is ₦12,500,000 (5,000,000 × ₦2.50), and the ₦2,500,000 issue costs reduce this balance, giving a net share premium of ₦10,000,000. These costs are never expensed through profit or loss.