If Aboki Holdings Limited issued 120, 000 ordinary share of ₦2.00 each at market value of 5.50k each, the share premium would?
Answer Details
The share premium is the amount by which the issue price of a share exceeds its nominal value. In this case, Aboki Holdings Limited issued 120,000 ordinary shares at ₦2.00 each, but the market value of each share was ₦0.055 (5.50k). Therefore, the share premium per share is ₦0.055 - ₦2.00 = -₦1.945 (negative because the market value is less than the nominal value).
Since the share premium is negative, it means that the market value of the shares is less than their nominal value, and the company will not receive any share premium. Therefore, the answer is (d) ₦420,000, which is the product of 120,000 shares and ₦2.00 nominal value per share.