it did not subscribe to rights shares and sold rights of all the 1000 shares 621454
Determination Of Cost Of Investment In Case Of A Rights Issue – Old HoldingMadhukar Finance Ltd. had acquired 2,000 shares of Krishnamurthy Aluminum Ltd. in July 2004. They were being carried in the 31–03-2006 balance sheet at Rs. 12,96,000. Krishnamurthy Aluminum Ltd. came out with a rights issue of 1 share each for every 2 shares held by the existing shareholders at a price of Rs. 450 each in the month of August 2006. Determine the cost of investment after the rights issue under the following three situations:
- Madhukar Finance Ltd. fully subscribed to the rights shares.
- It subscribed to only 500 rights shares and sold rest of the rights in the market for Rs. 260 each.
- It did not subscribe to rights shares and sold rights of all the 1000 shares.