- 1 Marks
Question
Opa Limited has the following capital structure:
Ordinary share capital – 200,000 shares of 50k each – N100,000
Share Premium Account – N150,000
The company made a rights issue of 1 for 5 at N1.50, which was fully subscribed.
Determine the value of the rights issue.
A. N40,000
B. N50,000
C. N60,000
D. N70,000
E. N75,000
Answer
C
Explanation:
The correct answer is C because the value of the rights issue is calculated as follows:
- Number of shares issued: 1 for every 5 existing shares = 200,000 / 5 = 40,000 shares
- Value of the rights issue: 40,000 shares × N1.50 = N60,000
- Tags: Company Finance, Rights Issue, Share Capital
- Level: Level 1
- Topic: Accounting Concepts
- Series: MAY 2014
- Uploader: Theophilus