On 3 January 2021, 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.
On 2 November 2021, the market value of the ordinary shares of Nkemdinakachukwu Electronics Plc was ₦4.50. Nkemdinakachukwu Electronics Plc prepares its financial statements on 31 December annually.
Required:
i. Can Nkemdinakachukwu Electronics Plc remeasure its ordinary share capital in its statement of financial position as at 31 December 2021?
ii.Assume that you are the reporting accountant of Nkemdinakachukwu Electronics Plc. How will you recognise the change in the fair value of the ordinary shares in the company’s statement of financial position?
Suggested answer to practice activity 20.12
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