Given information:
- Purchase price of building = Rs. 5,40,000
- Face value per share = Rs. 100
- Premium = 20%
When shares are issued at a premium of 20%, the issue price per share needs to be calculated:
Premium per share = 20% of Rs. 100 = Rs. 20
Issue price per share = Face value + Premium
Issue price per share = Rs. 100 + Rs. 20 = Rs. 120
To find the number of shares to be issued:
Number of shares = Issue price per shareTotal consideration (Purchase price)
Number of shares = 1205,40,000 = 4,500 shares
The company will issue 4,500 shares at Rs. 120 per share (Rs. 100 face value + Rs. 20 premium) to pay for the building worth Rs. 5,40,000.