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september 2016 exam (ii)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › september 2016 exam (ii)

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
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  • January 12, 2017 at 6:20 am #366114
    Anuja Nair
    Member
    • Topics: 365
    • Replies: 353
    • ☆☆☆☆

    Hi sir for September 2016 Exam, question 32, part (a) , Observation (4) , which states

    ” I note that our share price is now $2·30, how does this compare with our share price immediately before we bought Tamsin Co?”

    In the answer key, it is given as “The increase in share capital is 6 million shares, the increase in the share premium is $6million, thus the total proceeds for the 6 million shares was $12million giving a share price of $2·00 at the date of acquisition of Tamsin Co. The current price of $2·30 presumably reflects the market’s favourable view of Gregory Co’s current and future performance.

    I understand that the increase in share capital is 6 million shares but i don’t understand why there is an increase in the share premium of $6million. Could you explain the calculations to me sir.

    January 12, 2017 at 8:45 am #366127
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    I believe that this line from the question should answer it!

    ‘Other component of equity (share premium) 6,000 zero’

    January 15, 2017 at 4:11 am #366592
    Anuja Nair
    Member
    • Topics: 365
    • Replies: 353
    • ☆☆☆☆

    Ouh yes. I overlooked that. sorry. i get it now sir. Thanks.

    January 15, 2017 at 6:46 am #366609
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    You’re welcome

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