Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Conceptual query on valuation-financial reporting

758 views 2 replies

Alok Kumar

CA FINAL

109 Points Posted on 23 August 2012

please can anybody help me out in understanding- While valuing share under NET ASSET METHOD, we calculate Intrinsic value per share fully paid up. and in order to find the value of a partly paid up share we substract the unpaid amt. of the partly paid up share from the VALUE OF FULL PAID UP SHARE.

MY QUESTION IS WHY dont we simply calculate the value of partly paid up share by multiplying the intrinsic value with the paid up value of partly paid up share.

Please comment using the given data:

Intrinsic value per share- Rs.23 per share fully paid

Now what will be the value of 1 partly paid share of Rs.10, Rs. 8 paid up.

will it be

230-2= 228

23*8=184

which answer is correct.

Please answer it with explanation.........

Thanks in advance

Replies (2)

Guest

Rs.23 (value of fully paod up share) is for Rs10 (Face value)

now for Rs8 (FACE VALUE) value will be 23*8/10

but study mat n suggested is wrong as said by Pravin Sir

CA Lokesh Pokharna

CA (Ahmedabad Bhilwara Chittorgarh)

4128 Points Posted on 23 August 2012

TALKING PRACTICLLY DEAR ALOK IT WILL BE 23(FOR 10 FULLY PAID UP)

AND 23-2=21 (FOR 8 PAID UP)

LOGIC- MARKET VALUE OF 8 PAID UP WILL BE 21 BOZ INVESTOR WHO ALREADY GIVEN 8 RS WIL GIVE RS 2 ALSO AND MAKE SHARE FULLY PAID UP. WHY HE WOULD BEAR LOSS.