On July 1, 2019, Lee Kwang Soo (LKS) Company issued rights to shareholders to subscribe to additional ordinary shares. One right was issued for each share owned. A shareholder could purchase one additional share for ten rights plus P60 cash. The rights expire on September 30, 2019. On July 1, 2019 the market price of a share with the right attached was P160 while the market price of one right alone was P8. Star Company’s shareholder’s equity on June 30, 2019 comprise the following: Ordinary share capital, P100 par (4,000 shares issued and outstanding) P400,000 Share premium 240,000 Accumulated profits 320,000 Assuming on July 31, 2019, 2,500 share rights were exercised, by what amount would LKS company’s total shareholder equity increase as a result of the exercise of share rights?
On July 1, 2019, Lee Kwang Soo (LKS) Company issued rights to shareholders to subscribe to additional ordinary shares. One right was issued for each share owned. A shareholder could purchase one additional share for ten rights plus P60 cash. The rights expire on September 30, 2019. On July 1, 2019 the market price of a share with the right attached was P160 while the market price of one right alone was P8. Star Company’s shareholder’s equity on June 30, 2019 comprise the following:
Ordinary share capital, P100 par (4,000 shares issued and outstanding) P400,000
Share premium 240,000
Assuming on July 31, 2019, 2,500 share rights were exercised, by what amount would LKS company’s total shareholder equity increase as a result of the exercise of share rights?
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