XYZ Enterprises bought ABC Enterprises by issuing 30,000 ordinary shares of N1 each at a discount of 5%. The assets of ABC Enterprises are stock N18,000. De...
Question 1 Report
XYZ Enterprises bought ABC Enterprises by issuing 30,000 ordinary shares of N1 each at a discount of 5%. The assets of ABC Enterprises are stock N18,000. Debtors N11,000. The purchase consideration was
Answer Details
To calculate the purchase consideration, we need to find the total value of the shares issued.
Number of shares issued = 30,000
Nominal value of each share = N1
Total nominal value of shares issued = 30,000 x N1 = N30,000
Discount given on shares = 5% of N30,000 = N1,500
Net proceeds from the issue of shares = N30,000 - N1,500 = N28,500
Therefore, the purchase consideration is N28,500.
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