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XYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity shares to a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.
Q. The process of issuing shares to a vendor in exchange of any asset is known as:
- a)Issue of share for cash
- b)Issue of share at discount
- c)Issue of share at premium
- d)Issue of share for consideration other than cash
Correct answer is option 'D'. Can you explain this answer?
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PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh...
Issuing Shares to a Vendor in Exchange of an Asset
When a company decides to issue shares to a vendor in exchange for an asset, it is referred to as "Issue of share for consideration other than cash." In this scenario, PassageXYZ Ltd issued 20,000 equity shares to a vendor in exchange for the machinery required to manufacture the packed food.
Explanation:
1. Issue of Share for Consideration Other Than Cash:
- Issuing shares for consideration other than cash means that the company is giving shares to the vendor in exchange for an asset or service, rather than receiving cash in return.
- In this case, PassageXYZ Ltd issued equity shares to the vendor in exchange for the machinery.
- This allows the company to acquire the necessary assets without the need for immediate cash payment.
2. Purpose of Issuing Shares to a Vendor:
- PassageXYZ Ltd decided to diversify its operations due to the increase in demand for packed food in the market.
- To do so, they needed machinery for manufacturing the packed food.
- Instead of purchasing the machinery with cash, they decided to issue shares to a vendor in exchange for the machinery.
- This allows the company to acquire the necessary assets while also involving the vendor as a shareholder in the company.
3. Benefits of Issuing Shares to a Vendor:
- By issuing shares to a vendor, PassageXYZ Ltd can conserve its cash reserves, as they do not have to make a cash payment for the machinery.
- The vendor becomes a shareholder in the company, which can align their interests with the company's growth and success.
- This type of transaction can help strengthen the relationship between the company and the vendor, as they now have a vested interest in each other's success.
4. Undersubscription of Equity Shares:
- The company received applications for 46,000 equity shares from the general public, but they only issued 20,000 shares to the vendor.
- Due to the undersubscription of equity shares, the remaining shares were not issued to the public.
- Undersubscription occurs when the demand for shares is less than the number of shares available for subscription.
- In this case, the company did not need to issue all the shares to the public as there was insufficient demand.
To summarize, the process of issuing shares to a vendor in exchange for an asset is known as "Issue of share for consideration other than cash." PassageXYZ Ltd opted for this method to acquire machinery for manufacturing packed food without making a cash payment. This approach allowed the company to conserve its cash reserves and involve the vendor as a shareholder. Additionally, due to undersubscription, the remaining shares were not issued to the public.
When a company decides to issue shares to a vendor in exchange for an asset, it is referred to as "Issue of share for consideration other than cash." In this scenario, PassageXYZ Ltd issued 20,000 equity shares to a vendor in exchange for the machinery required to manufacture the packed food.
Explanation:
1. Issue of Share for Consideration Other Than Cash:
- Issuing shares for consideration other than cash means that the company is giving shares to the vendor in exchange for an asset or service, rather than receiving cash in return.
- In this case, PassageXYZ Ltd issued equity shares to the vendor in exchange for the machinery.
- This allows the company to acquire the necessary assets without the need for immediate cash payment.
2. Purpose of Issuing Shares to a Vendor:
- PassageXYZ Ltd decided to diversify its operations due to the increase in demand for packed food in the market.
- To do so, they needed machinery for manufacturing the packed food.
- Instead of purchasing the machinery with cash, they decided to issue shares to a vendor in exchange for the machinery.
- This allows the company to acquire the necessary assets while also involving the vendor as a shareholder in the company.
3. Benefits of Issuing Shares to a Vendor:
- By issuing shares to a vendor, PassageXYZ Ltd can conserve its cash reserves, as they do not have to make a cash payment for the machinery.
- The vendor becomes a shareholder in the company, which can align their interests with the company's growth and success.
- This type of transaction can help strengthen the relationship between the company and the vendor, as they now have a vested interest in each other's success.
4. Undersubscription of Equity Shares:
- The company received applications for 46,000 equity shares from the general public, but they only issued 20,000 shares to the vendor.
- Due to the undersubscription of equity shares, the remaining shares were not issued to the public.
- Undersubscription occurs when the demand for shares is less than the number of shares available for subscription.
- In this case, the company did not need to issue all the shares to the public as there was insufficient demand.
To summarize, the process of issuing shares to a vendor in exchange for an asset is known as "Issue of share for consideration other than cash." PassageXYZ Ltd opted for this method to acquire machinery for manufacturing packed food without making a cash payment. This approach allowed the company to conserve its cash reserves and involve the vendor as a shareholder. Additionally, due to undersubscription, the remaining shares were not issued to the public.
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The process of issuing shaves to vendor in exchange of any asset is known as issue of shares for consideration other than cash
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PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer?
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PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer? for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer?.
PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer? for Humanities/Arts 2024 is part of Humanities/Arts preparation. The Question and answers have been prepared according to the Humanities/Arts exam syllabus. Information about PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Humanities/Arts 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer?.
Solutions for PassageXYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each. The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversity its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issue 20,000 equity sharesto a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares, Due to undersubscription of equity shares the shares were not issued to public.Q.The process of issuing shares to a vendor in exchange of any asset is known as:a)Issue of share for cashb)Issue of share at discountc)Issue of share at premiumd)Issue of share for consideration other than cashCorrect answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for Humanities/Arts.
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