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I’m looking at june 2014 ques 2 but i do not understand how at 1 april 2013 the share premium in the Statement of changes in equity is $2260 and at 31 march 2014 the amount is $22400. I looked at the answer sheet but i still do not understand.
Does this explain it?
The number of shares prior to the 2 for 5 rights issue was 160 million (56,000 x 4 (i.e. 25 cents shares) x 5/7). Therefore the rights issue was 64 million shares at 60 cents each, giving additional share capital of $16 million (64 million x 25 cents) and share premium of $22·4 million (64 million x (60 cents – 25 cents)).
Is that any clearer?
No it doesnt make any sense to me. Where does the 5/7 come from. In other past paper qns they divide when its 50 cents yet here when its 25 cents we times please help
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