Hii everyone pls solve this out...
From the following calculate fair value of an equity share assuming that out of the total profits those amounting to Rs.41,00,000 are fictitious.
1. Share capital:
550,000 10% preference shares of Rs.100 each, fully paid up.
5500,000 equity shares of Rs. 10 each fully paid up.
2. liability to outsiders : Rs .75,00,000
3. Reserves and surplus: Rs.45,00,000
4. The average normal profit after taxation earned every year by the company during last five years Rs. 85,05,000
5. The normal profit earned on the market value of fully paid equity shares of similar companies is 12%.
ANSWER : Rs. 7.31
CAclubindia
