DETERMINATION OF COST OF INVESTMENT ACQUIRED IN EXCHANGE
Billimoria Investments Ltd. holds 5000 shares of Frenny Power Corporation Ltd. It acquires 4000 shares of Rajeev Kapoor Khana Khazana Ltd. from Tulsi Irani Investments Ltd. in exchange for these shares. Determine the cost of shares acquired by Billimoria Investments Ltd. under the following three situations:
- If shares of both Frenny Power Corporation Ltd. and Rajeev Kapoor Khana Khazana Ltd. were listed at NSE and their quoted prices on the day of the deal were Rs. 318 and Rs. 402 per share respectively. The brokerage payable on sale in the BSE is Rs. 3 per share and Rs. 4 per share respectively.
- If Rajeev Kapoor Khana Khazana Ltd. were unlisted and therefore its market value were not known.
- If Frenny Power Corporation Ltd. were unlisted.