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BRILLIANT’S Investment Accounting 293

Working Notes:
3,000 Shares
1. Bonus Shares = = ` 1,000 Shares
3

3,000 Shares + 1,000 Shares
2. Rights Shares = = 1,000 Shares
4
1
3. Rights shares subscribed = of 1,000 = 500 shares.
2
4. Sale of rights entitlement = 500 × ` 8 = ` 4,000
Shares were purchased cum-right, therefore, amount received by selling rights will be
credited to Investment Account [AS-13, Para - 13]
5. Cost of shares on 31.12.2016 will be calculated as follows:

` 60,000 6,000 4,000  
× 2,250 = ` 31,000
4,500
Profit on Sale of 2,250 Shares on 31.12.2016 `
Sale Proceeds 37,000
60,000 6,000 4,000 
Less: Average Cost: × 2,250 31,000
4,500
Profit on Sale 6,000
Important Note:
At the time of calculating cost of shares on 31.12.2016 amount received by selling
rights will be deducted from the total cost of the shares as the shares were purchased cum-
right.

Illustration 3.3.13
The following transactions of MTV Ltd. took place during the year ended 31st March, 2017:
2016
1st April Purchased ` 12,00,000, 8% bonds at ` 80.50 cum-interest. Interest is payable
on 1st November and 1st May.
12th April Purchased 1,00,000 equity shares of ` 10 each in X Ltd. for ` 40,00,000.
1st May Received half-year's interest on 8% bonds.
15th May X Ltd. made a bonus issue of three equity shares for every two held. Investor
Ltd. sold 1,25,000 shares for ` 20 each.
1st July Purchased 50,000 equity shares of ` 10 each in C Ltd. at ` 7.75 each.
1st October Sold ` 3,00,000, 8% bonds at ` 81 ex-interest.
1st November Received half-year's bond interest.
1st December Received 18% dividend on equity shares in X Ltd.