The share capital of Waugh Ltd 10 000 000 ordinary shares that had an issue price of $4.00 per share and they are currently paid to $1.00.
-The directors of Waugh Ltd are considering a consolidation of shares.Which of the following combinations of share consolidations are possible:
I. $\quad$ 2 000 000 shares paid to $5.00 with $15.00 uncalled
II. $\quad$ 20 000 000 shares paid to $0.50 with $2.00 uncalled
III. $\quad$2 500 000 shares paid to $4.00 with $12.00 uncalled
IV. $\quad$1 000 000 shares paid to $10.00 with $25.00 uncalled.

Question

The share capital of Waugh Ltd 10 000 000 ordinary shares that had an issue price of $4.00 per share and they are currently paid to $1.00.
-The directors of Waugh Ltd are considering a consolidation of shares.Which of the following combinations of share consolidations are possible:
I. $\quad$  2 000 000 shares paid to $5.00 with $15.00 uncalled
II. $\quad$ 20 000 000 shares paid to $0.50 with $2.00 uncalled
III. $\quad$2 500 000 shares paid to $4.00 with $12.00 uncalled
IV. $\quad$1 000 000 shares paid to $10.00 with $25.00 uncalled.

Quizplus · Accepted Answer

To consolidate shares, the total amount of share capital must remain the same, so the total paid up and the total uncalled capital must equal the current share capital of 10,000,000 ordinary shares with a paid up capital of $1.00 per share.

Option I:
If 2,000,000 shares are consolidated at $5.00 per share, then the paid-up capital will be $10,000,000, and the uncalled capital will be $15,000,000. The total capital will be $25,000,000 which is higher than the current share capital. Therefore, option I is not possible.

Option II:
If 20,000,000 shares are consolidated at $0.50 per share, then the paid-up capital will be $10,000,000, but the uncalled capital will be only $2,000,000. The total capital will be $12,000,000 which is lower than the current share capital. Therefore, option II is not possible.

Option III:
If 2,500,000 shares are consolidated at $4.00 per share, then the paid-up capital will be $10,000,000, and the uncalled capital will be $12,000,000. The total capital will be $22,000,000 which is equal to the current share capital. Therefore, option III is possible.

Option IV:
If 1,000,000 shares are consolidated at $10.00 per share, then the paid-up capital will be $10,000,000, but the uncalled capital will be $25,000,000. The total capital will be $35,000,000 which is higher than the current share capital. Therefore, option IV is not possible.

Therefore, only option III is possible.

The Share Capital of Waugh Ltd 10 000 000 Ordinary \quad

The Share Capital of Waugh Ltd 10 000 000 Ordinary $\quad$