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Does anyone know why in F9 June 2009 & Kaplan’s mock exam paper the share exchange meant adjustments to the parents share capital & share premium but the June 2010 exam didn’t? I have checked the wording and they all say Share Exchange? I thought that a share exchange wouldn’t affect the balance as you aren’t creating new shares just swapping existing shares you have?
I think you are talking about F7 (Pacemaker).
Here are examiner’s extracts:
Quote:The purchase consideration by way of a share exchange (75 million shares in Pacemaker for 30 million shares in Vardine) would be recorded as an increase in share capital of $75 million ($1 nominal value) and an increase in share premium of $45 million (75 million x $0·60)In June 2010, the examiner in Question 1 explicitly states:
Quote:Picant has recorded the share exchangeSo now what do you think, if the nominal value is $1 and the share price of P is $1.60, obviously $0.60 per share would be share premium as company is increasing its share capital.
HTH
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