On 31 July 2018, Sipho bought 1 000 ordinary shares in ABC Ltd at a cost...
On 31 July 2018, Sipho bought 1 000 ordinary shares in ABC Ltd at a cost of R2 750. On 31 December 2018 the company made a 1 for 10 bonus issue. On 31 March 2019, Sipho sold 300 shares for R800. What is the new base cost of Sipho’s holding?
R1 000
R1 750
R2 750
Cannot be determined from the information given
Homework Answers
Ans )Cost base will not change for profit calculation on the sale of shares as bonus shares are received without any cost, therefore, the cost of 100 ( i.e 1 for 10)bonus shares is 0. so it will result in 1100 shares at cost of 2750 which comes to 2.5 per share.
the sales price of shares sold comes to 800/300 2.67 per share
so profit earned per shares sold =2.67-2.5=0.17 pr share.
Therefore based cost is R 2750.
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