alleryStart learning →A firm issues 2,000 own shares of Rs 10 par, fair value Rs 25 each, to buy an investment. Cost?
ARs 50,000
BRs 30,000
CRs 20,000
DRs 25,000
Answer & Solution
Correct answer: A. Rs 50,000
The cost is the fair value of the shares issued, 2,000 x 25 = 50,000, not their nominal value of 20,000.
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