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Question

R Ltd. purchased the business of C Ltd. for Rs. 2,70,000 payable in fully paid shares. R Ltd. allocated equity shares of Rs. 10 each fully paid in satisfaction of the claim by C Ltd. such shares are issued at par. The number of shares to be issued by R Ltd. to settle the purchase consideration will be ______.

A
22,500
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B
27,500
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C
27,000
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D
30,000
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Solution

The correct option is C 27,000
Here, the amount of purchase is Rs 2,70,000 in fully paid shares. The shares are allocated at Rs 10 per share and are issued at par which means no discount or premium. Hence, to settle the purchase consideration, R Ltd has to issue Rs 2,70,000/Rs 10 i.e. 27,000 shares.

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