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Exam (elaborations)

FAC2601 Assignment 1 second semester due on 23 August 2023

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This document contains the solution to the fac2601 assignment 1 second semester due on 23 august 2023, using this document will ensure that you get a 90% plus pass mark, trusted solution.

Institution
University Of South Africa (Unisa)
Course
Financial Accounting for Companies (FAC2601)

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FAC2601
Assignment 1
Due on 23 August 2023




Question 1a: Liability of Craft Ltd towards Sontech Ltd

In this scenario, Craft Ltd is acting as an underwriter for Sontech Ltd's issue of 250,000 ordinary
shares at R3 each. Craft Ltd charges an 8% commission for their services. However, the public only
took up 235,000 of the shares that were offered. Let's break down the liability of Craft Ltd towards
Sontech Ltd:

1. Underwriting Agreement: When a company like Sontech Ltd issues new shares to the public,
they often enter into an underwriting agreement with a financial institution like Craft Ltd.
This agreement typically outlines the terms and conditions of the underwriting, including the
commission to be paid to the underwriter.

2. Commission: Craft Ltd is entitled to an 8% commission on the total value of the shares
offered, which is calculated as follows:

Commission = (8% of total value of shares offered)
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Institution
University of South Africa (Unisa)
Course
Financial Accounting for Companies (FAC2601)

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Written in
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  • fac2601 assignment 1 second semester 2023
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