CA Inter P1 · Chapter 11 · Question 2 of 10
Case: Pankaj Ltd absorbs Qamar Ltd, which has 1,50,000 equity shares. Pankaj Ltd will issue 3 equity shares of ₹10 each, at an issue price of ₹15, for every 2 shares of Qamar Ltd, and will also pay ₹2 in cash per share of Qamar Ltd. The purchase consideration is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) ₹36,75,000
Explanation
Shares to be issued = 1,50,000 x 3/2 = 2,25,000 shares; value at issue price = 2,25,000 x 15 = 33,75,000. Cash = 1,50,000 x 2 = 3,00,000. Purchase consideration = ₹36,75,000. Shares issued must be valued at issue price, not face value.
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