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ACCA Applied Skills · Taxation (UK) · Gains and losses on the disposal of shares and securities

Nadia bought 6,000 shares in Kestrel plc for £12,000 in 2019. On 10 September 2025 Kestrel plc made a 1 for 3 rights issue at £2.50 per share, and Nadia took up all her rights. She did not sell any shares. What is her new share pool cost after the rights issue?

The new pool cost is £17,000. A 1 for 3 rights issue on 6,000 shares gives 2,000 new shares at £2.50, costing £5,000. This is added to the original £12,000 cost, because shares bought under a rights issue are added to the existing share pool.

  1. A£17,000Correct
  2. B£12,000
  3. C£17,500
  4. D£14,000

Explanation

A rights issue of 1 for 3 gives 2,000 new shares. They cost 2,000 x £2.50 = £5,000. The pool cost becomes £12,000 + £5,000 = £17,000 for 8,000 shares. Option £12,000 ignores the cost of the new shares. Option £14,000 wrongly adds only 2,000 x £1.

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