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URGENT: AS

29 May 2016

T Ltd acquired 10000 shares of RS. 10 each of A Ltd at RS. 12 per share in 2014. In 2016 T acquired another 5000 shares of RS.10 each of A at RS. 21 each on right basis. Calculate the cost of acquisition of 15000 shares, if the rights were sold in the market at the rate of RS. 15 per share. Cost of acquisition as per AS 13

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Naveen Barida (CA) (22 Points)
Replied 30 May 2016

It actually depends on the nature of investments.

Assuming the shares purchased in 2014 with a long term intent,the shares required to shown at cost value i.e rs 10 and create a provison for diminuition a/c and put difference of Rs 2/share in that account.

And the right shares purchased is current investment,the lower of cost or fair value to be recoreded in books i.e.rs 10 and remaining Rs11 to be shown in provision for diminuition a/c,