[shuv27]

I wrote a lot in the deficiency question but like you, but unsure if it was right

[shuv27]

@ boranaresulaj: I think your question referes to note (i)
On 1 Jan X8, Klopp Co issued 600,000 shares at their full market price of $1.80

Buth since these are $1 shares, in the share capital was put at $600,000. This is the nominal value of the shares. I think the 0.8 comes from $1.80 – the nominal $1 = $0.80 PREMIUM which is entered into the share premium column. Please correct me if I’m wrong!

Note: you’ve probably passed the exam, but someone else may have the same query, so I believe I’m helping someone! Apologies if I’m wrong but you gotta admit it’s a cracking theory!

[shuv27]

Sorry ignore me!

[shuv27]

By definition, I believe that the “shadow price” is the amount EXTRA that a company should be willing to pay for, in this case, a material.

Therefore in addition to $3 Material Z currently costs, and seeing as Material Z is in limited supply, the company will pay up to but not over the extra $3.70.

$3 + $3.70 = $6.70

A penny for your thoughts, Mr. Moffat?

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