Hello everyone It is the first time that I will take the institute's exams. I will start with CT2. I can't understand the solution given in the book for Exercise 6.6 on page 20 (Chapter 6). I am using the Combined Material Pack of BPP. Any ideas? Thank you in advance.
Can you tell me where in the solution you come unstuck? The question appears to be a rights issue, and how it affects the reserves in a company's SPF. Can you tell me where you get to in the maths before you hit a stumbling block?
Thank you for your answer I understand that the ex-rights price share is equal to 200 (first rights issue in question 6.5). I can't understand how the other accounts are affected. Thank you in advance. Martha
Hi Martha - have you looked at the solutions on page 37? You need to consider how much cash is raised from issuing new shares, and then how that additional cash and the new shares are reflected in the SoFP. Cash increases in the current assets. The share capital increases as does the share premium reserve.
