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 premium of 20%. Number of shares to be issued by R Ltd. to settle the purchase consideration will be _____.

• A. 22,500
• B. 27,500
• C. 27,000
• D. 30,000

Answer 1

The correct option is A 22,500

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 premium of 20% which means the shares will be allocated as Rs 10 + 20% of Rs 10 i.e. Rs 12.. Hence, to settle the purchase consideration, R Ltd has to issue Rs 2,70,000/Rs 12 i.e. 22,500 shares.