Practicing Success
Read the following passage and answer question from: Azad Limited having a nominal Capital of ₹3,00,000 divided into shares of ₹10 each offered for public subscription of 20,000 shares payable as ₹2 on application, ₹3 on allotment and balance in two calls of ₹2.50 each. Application were received for 24,000 shares by the company. All the applicants were allotted shares on pro-rata and balance in excess of application was adjusted towards allotment and balance, if any is to be returned. |
Identify the source(s) of finance that Azad Limited had used to raise funds: |
Shares Debentures Shares as well as Debentures Machine |
Shares |
The correct answer is option 1- shares. Azad Limited had used the source of finance to raise funds- NOTE- Azad Limited issued 7% debentures of ₹100 each at a discount of 20% as purchase consideration for a machine purchased from Hari Limited. Debentures are issued for purchase consideration not for raising funds. |