CA Inter P1 · Chapter 11 · Question 8 of 10
Case: Chirag Ltd already holds 20% of the 1,00,000 equity shares of Deepa Ltd. On absorption of Deepa Ltd, Chirag Ltd will issue 1 of its equity shares for every 2 shares of Deepa Ltd held by other shareholders. The number of shares to be issued by Chirag Ltd is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 40,000
Explanation
Shares held by Chirag Ltd itself are cancelled; consideration is payable only to outside shareholders. Outside shares = 1,00,000 x 80% = 80,000. Shares to be issued = 80,000 x 1/2 = 40,000.
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