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Investment ac
Accountancy
Sir, I have a doubt in 3rd and 4th point (reg.rights entitlement)of investment ac question which is given in rtp may 21.
Answers (7)
Kumar G
What's the Doubt?
Have doubt in 4th point. Trying to understand what it's conveying. And when I looked at answer, got slight confusion!
Thread Starter
AAYUSH GUPTAHave doubt in 4th point. Trying to understand what it's conveying. And when I looked at answer, got slight confusion!
Becoz he credited to investment account right and profit he posted to p and l so I think it's to
13. When right shares offered are subscribed for, the cost of the right shares is added to the carrying amount of the original holding. If rights are not subscribed for but are sold in the market, the sale proceeds are taken to the profit and loss statement. However, where the investments are acquired on cum-right basis and the market value of investments immediately after their becoming ex-right is lower than the cost for which they were acquired, it may be appropriate to apply the sale proceeds of rights to reduce the carrying amount of such investments to the market value.
CA Suraj Lakhotia Admin
13. When right shares offered are subscribed for, the cost of the right shares is added to the carrying amount of the original holding. If rights are not subscribed for but are sold in the market, the sale proceeds are taken to the profit and loss statement. However, where the investments are acquired on cum-right basis and the market value of investments immediately after their becoming ex-right is lower than the cost for which they were acquired, it may be appropriate to apply the sale proceeds of rights to reduce the carrying amount of such investments to the market value.
Thank you sir! It took little time to understand but yes, now i got the answer! Again thank you sir