Mr. AB acquires 28,000 equity shares of 10 each in F Ltd. for 3,36,000 inclusive of brokerage and stamp duty on 1 st April, 2024. F Ltd. announces…

Investment Account in Books of AB (Scrip: Equity Shares in F Ltd.) Date No. ₹ Date No. ₹ 1.4.24 To Bal b/d 28,000 3,36,000 01.01.25 By Bank (Sale of shares) 18,000 2,99,880 30.9.24 To Bonus 8,000 30.11.24 To Bank (Rights Shares) 9,000 1,35,000 01.01.25 To P&L A/c (Profit on sale of shares) 1,11,480 31.3.25 By Bal. c/d 27,000 2,82,600 45,000 5,82,480 45,000 5,82,480 Working Notes: (1) Bonus Shares = (28,000/ 7) x 2 = 8,000 shares (2) Right Shares = (28,000+8,000) / 8 x 3 = 13,500 shares (3) Rights shares sold = 13,500×1/3 = 4,500 shares (4) Profit on sale of 18,000 shares [40% of shareholding (28,000 + 8,000 + 9,000)] = Sales proceeds – Average cost Sales proceeds = 2,99,880 [i.e. (18,000 x 17) – 2%] Average cost = (3,36,000+1,35,000) / 45,000 ×18,000 = 1,88,400 Profit = 2,99,880- 1,88,400= 1,11,480. (5) Cost of shares on 31.3.2025 (3,36,000+1,35,000) / 45,000 ×27,000 = 2,82,600 (6) Sale of rights amounting - 27,000 (6x 4,500 shares) will not be shown in investment A/c but will directly be taken to P & L statement. Alternatively, if using per unit cost of the shares, then 1. Average cost of shares per unit = ( 3,36,000 +1,35,000) / (28,000 + 8,000 + 9,000) = 4,71,000 / 45,000 = 10.47 per unit (rounded off to 2-decimal) 2. Profit on sale of 18,000 shares = Net Sales Proceeds - Average Cost of shares sold = [(18,000 × 17) - (18,000 × 17 × 2%)] - (18,000 × 10.47) = ( 3,06,000 -6,120) -1,88,460 = 2,99,880 -1,88,460 = 1,11,420 3. Cost of shares as on 31 st March, 2025 = 27,000 × 10.47 = 2,82,690