Question

A company purchased machinery for ₹18,00,000 and in consideration issued shares at 20% premium. What will be the face value of shares issued?

• A. ₹21,60,000
• B. ₹18,00,000
• C. ₹14,40,000
• D. ₹15,00,000

Hint:

When shares are issued at a premium, divide the consideration by (100% + premium%) to find face value.

Answer 1

The Correct Option is D

Shares are issued at 20% premium, i.e., Issue Price = 120% of Face Value. \[ \text{Face Value} = \frac{18,00,000 \times 100}{120} = ₹15,00,000 \]