Practice Activity 20.10 Issue of shares by a company – Recognising the financial instrument in the b

Practice Activity 20.10 Issue of shares by a company – Recognising the financial instrument in the books of the investor

Nkemdinakachukwu Electronics Plc issued 1,000,000 ₦1 ordinary shares to the public at ₦1.50 each. The transaction costs were ₦50,000. Akajiaku Limited was one of the several investors who purchased the shares in Nkemdinakachukwu Electronics Plc. Akajiaku Limited purchased 200,000 ordinary shares at ₦1.50 each and prepares its financial statements on 31 December annually.

Required: How should Akajiaku Limited recognise its purchase of 200,000 ordinary shares at ₦1.5 each?

Suggested answer to practice activity 20.10