On April 1, 2020, Darius acquired 2,000 ordinary shares at P48 per share in Alan Enterprises...

On April 1, 2020, Darius acquired 2,000 ordinary shares at P48 per share in Alan Enterprises and classified the Equity investment FVOCI. In addition, the broker’s commissions for this transaction were P2,400. During 2020, Darius received P7,200 in cash dividends, and on July 1, 2020, a 5% stock dividend was issued. On December 1, Alan issued a 2-for-1- stock split. At December 31, 2020, the book value per ordinary share held by Darius is?

Expert Solution

1. Number of shares as on 31^st December 2020 is

Shares purchased on April 01, 2020 = 2000

Stock dividend on July 01, 2020 = 5% of 2000

= 100

Shares split on December 01, 2020 = 2 for 1 stock split

= 2 * (2000+100)

=2 * (2100)

= 4200

2. Book Value of the shares as on December 31, 2020 is

Particulars	Calculation	Amount
Value of shares on purchase on April 01, 2020	2000*48	96000
Brokerage commission incurred		(2400)
Cash dividend received		7200
Value as on December 31, 2020		100800

3. Book value per share as on December 31, 2020 is

= Book value as on Dec 31, 2020/ No of shares as on Dec 31, 2020

=100800/4200

=24

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