Page 274 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 12: Valuation of Shares

! Notes
Caution Ascertaining the amount of liabilities, necessary provision for contingent liabilities
and for expenses as outstanding salaries, taxation, rent, etc. should be made.
Self Assessment

Choose the correct answer from the following options:
12. Intrinsic value of the share is determined by:
(a) Net Assets Method
(b) Yield Method
(c) Fair Value Method

(d) None of these.
13. Market value is determined through normal rate and:
(a) Rate of Dividend
(b) Rate of Earning

(c) Yield
(d) Net Assets.
14. Value of the share is generally found in comparison to face value:
(a) More
(b) Less

(c) Equal
(d) More or less.
15. From the investors’ point of view, the best method to find out the value of a share is:
(a) Intrinsic Value Method

(b) Fair Value Method
(c) Income Method
(d) None of these.
16. If the rate of earning of a company is 11%, normal rate 10% and paid up value of the share
is ` 18, the value of the share will be:
(a) ` 19.80
(b) ` 16.33
(c) ` 6.11
(d) None of these.

Illustration 2 (Valuation of One Type of Equity Share and Valuation of Goodwill by Average Profit
Method)
From the following information, find out the value of each share:

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