On August 1, 2014, Cute Company issued rights to shareholders to - TopicsExpress



          

On August 1, 2014, Cute Company issued rights to shareholders to subscribe to additional share of its ordinary share. A shareholder can buy one new share for every 10 rights plus P20 cash. The rights will expire on October 1,2014. On July 31,2014, the market price of a share with the right attached was P40, while the market price of the right alone was P4. Cutes equity on July 31,2014, comprises of the following: Ordinary share capital, P10 par - P3,000,000 Share premium reserve - 600,000 Accumulated profits - 200,000 What is the effect on the shareholders equity if all the rights were exercised? A. 1,200,000 increase B. 600,000 increase C. 120,000 increase D. No change (Note: give your answer and explain)
Posted on: Wed, 26 Nov 2014 10:00:17 +0000

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