Day: August 31, 2023

The business of Alex, a sole trader, is acquired by a limited company called Lucy Ltd.

• net assets at valuation – £167,000
• agreed purchase price – £137,000
• cash paid in part settlement – £50,000
• ordinary shares of £1 each – 60,000

What is the premium per ordinary share?

Select ONE answer:

1. £0.45
2. £0.95
3. £1.28
4. £1.78

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – £137k – £50k – £60k = £27k / £60k = £0.45 per share
2. Not correct
3. Not correct
4. Not correct

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