Question

Moonwalk Ltd. purchased business of Converse Ltd. for a consideration of ₹ 25,00,000. The consideration was paid by cheque of ₹ 4,00,000 and issue of shares of ₹ 100 each at a premium. On issue of shares, Share Capital Account was credited by ₹ 17,50,000.

State the premium at which shares were issued to Converse Ltd.

Answer 1

Purchase Consideration: ₹ 25,00,000

Less: Paid by cheque: ₹ 4,00,000

Amount paid by issue of shares: ₹ 21,00,000

Share Capital credited: ₹ 17,50,000

Therefore,

Securities Premium = ₹ 21,00,000 − ₹ 17,50,000 = ₹ 3,50,000

Number of shares issued:

`(₹ 17,50,000)/(₹ 100) = 17,500` shares

Premium per share:

`(₹ 3,50,000)/(₹ 17,500) = ₹ 20` shares

Shares were issued at a premium of ₹ 20 per share (20%).