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- August 13, 2016 at 5:15 pm #332975
6000x$5.5 share premium
How the price of 5.5 comes?
August 13, 2016 at 6:02 pm #332991Here’s an extract from the question (6th line, first bullet point)
‘at the date of acquisition, shares in Viagem and Greca had a stock market value of $6.50 and $2.50 each, respectively’
Do you see where $5.50 comes from or do you need more?
August 13, 2016 at 9:47 pm #333022No, i can not understand how 5,5 comes.
Could you please help me more?August 13, 2016 at 11:23 pm #333030The Viagem shares have a face value of $1 each but they have a market value of $6.50
So when Viagem issues 6,000 new shares in its acquisition of Greca the double entry will be :
Dr Cost on Investment (6,000 x $6.50) 39,000
Cr Share Capital (6,000 x $1) 6,000
Cr Share Premium (6,000 x ($6.50 – $1)) $33,000Better?
August 14, 2016 at 4:17 pm #333140Yes!
August 14, 2016 at 5:31 pm #333151Good!
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