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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Investing in a company
Hi sir,
Not sure whether this question is really relating to F3.
Here it goes :
I own a company with net assets at $120,000 (Comprised of paid-up capital of $20,000 and retained earnings of $100,000) as at 31 December 2015.
On 1st of Jan 2016, I have a friend who is keen to invest some money in my company and each of us will hold 50% stake in the company. May I know how much capital my friend needs to contribute ?
No – it doesn’t relate to Paper F3.
Most sensible would be for him to buy from you 50% of your shares (and pay you half of what the actual value of the company is (which will not be the same as the value in the SOFP).
Then if you want to increase the capital of the company for you both to invest equal amounts into the company itself by buying more shares.