Given:₦6 000 10% preference shares of ₦0.50 each ₦6 000 ordinary shares of ₦1 each Capital reserves ₦2 700 000 Long-term liabilities ₦4 000 000Find the valu...
Long-term liabilities ₦4 000 000Find the value of authorized share capital?
Answer Details
The authorized share capital is the maximum amount of capital that a company is authorized to raise by issuing shares. It represents the total amount of money that the company is legally permitted to raise through the sale of its shares.
To calculate the authorized share capital, we need to add together the par value of all the different types of shares that the company is authorized to issue. In this case, the company is authorized to issue 10% preference shares with a par value of ₦0.50 each, and ordinary shares with a par value of ₦1 each.
The value of the 10% preference shares is calculated as follows:
6,000 shares x ₦0.50 par value per share = ₦3,000
The value of the ordinary shares is calculated as follows:
6,000 shares x ₦1 par value per share = ₦6,000
The total value of the authorized share capital is therefore:
₦3,000 + ₦6,000 = ₦9,000,000
Therefore, the answer is ₦9,000,000.