Mr. X acquires 200 shares of a company on cum-right basis for 60,000. He subsequently receives an offer of right to acquire fresh shares in the company in the proportion of 1:1 at ? 105 each. He does not subscribe but sells all the rights for 7 15,000. The market value of the shares after their becoming ex-rights has also gone down to ? 50,000. What should be the accounting treatment in this case?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Mr. X acquires 200 shares of a company on cum-right basis for ? 60,000. He
subsequently receives an offer of right to acquire fresh shares in the company in the
proportion of 1:1 at ? 105 each. He does not subscribe but sells all the rights for
7 15,000. The market value of the shares after their becoming ex-rights has also gone
down to 7 50,000. What should be the accounting treatment in this case?
Transcribed Image Text:Mr. X acquires 200 shares of a company on cum-right basis for ? 60,000. He subsequently receives an offer of right to acquire fresh shares in the company in the proportion of 1:1 at ? 105 each. He does not subscribe but sells all the rights for 7 15,000. The market value of the shares after their becoming ex-rights has also gone down to 7 50,000. What should be the accounting treatment in this case?
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