Determination of Cost of Investment in case of a Rights Issue-Old HoldingJai Investment and Finance Ltd. had acquired 3,000 shares of Gabbar and Sambha Ltd. in September 2004. They were being carried in the 31–03-2006 balance sheet at Rs. 17,85,000. Gabbar and Sambha Ltd. came out with a rights issue of 1 share each for every 3 shares held by the existing shareholders at a price of Rs. 398 each in the month of December 2006. Determine the cost of investment after the rights issue under the following three situations:
- Jai Investment and Finance Ltd. fully subscribed to the rights shares.
- It subscribed to only 600 rights shares and sold rest of the rights in the market for Rs. 63 each.
- It did not subscribe to rights shares and sold rights of all the 1000 shares.