Brought to you by www.maxpapers.com Bonus Shares Brought to you by www.maxpapers.com.

Slides:

Advertisements

Similar presentations

Chapter 7 Accounting Information Systems Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.

Advertisements

RE-CAP What is a partnership?

ACCT 2110 GENERAL LEDGER. ACCOUNTING EQUATION n Assets = Equities n Assets = Liabilities + Owner’s equity.

Corporations: Stock Values, Dividends, Treasury Stock, and Retained Earnings Chapter 20.

Shareholders’ Equity Sid Glandon, DBA, CPA Associate Professor of Accounting The University of Texas at El Paso.

Chapter 12. Account for stock dividends  Proportional distribution of corporation’s own stock to shareholders ◦ No cash provided to shareholders  Does.

CHAPTER 11 Corporate Reporting:

Chapter 12. Account for stock dividends  Proportional distribution of corporation’s own stock to shareholders  Does not change total stockholders’

1 Financing A Company - Equity Learning Outcomes:  Able to identify classes of shares  Know to account for the issuance of shares  Know to account for.

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 11 Reporting and Interpreting Stockholders’

Corporations: Organization, Stock Transactions & Dividends

CORPORATIONS: DIVIDENDS, RETAINED EARNINGS, AND INCOME REPORTING CHAPTER 15.

Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Reporting and Interpreting Owners’ Equity Chapter 11.

Part 3B: Equity, Dividends & Retained Earnings

CONSOLIDATIONS WEEK 4 TEXT CHAP 17 & 18 CONSOLIDATIONS WEEK 4 TEXT CHAP 17 & 18.

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Stock Valuation Chapter Eight.

Corporate Earnings and Capital Transactions

2 Introduction When a holding company (parent) purchases the share capital of its subsidiary (or subsidiaries), each company in the group: remains a legal.

The Statement of Stockholders’ Equity

Company Accounts Companies can be divided into 2 types: A Public Limited Company which is shown as Plc A Private Limited Company which is shown as Ltd.

Chapter McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Sources of Capital: Owners’ Equity 9.

C Learning Objectives 1. Nature of a Corporation 2. Stockholders’ Equity 3. Sources of Paid-in Capital 4. Issuing Stock 5. Treasury Stock Transactions.

Liabilities and Stockholders’ Equity Chapter 8. Liabilities Debts owed to others Current liabilities  Will be repaid within one year or less using current.

Companies: Retained Profits, Share Splits and Buy-backs and the Statement of Financial Performance Chapter 15 HORNGREN ♦ HARRISON ♦ BAMBER ♦ BEST ♦ FRASER.

Limited Companies LTD and PLC What they are and the differences between them.

EQUITY ACCOUNTING TEXT CHAP 20 EQUITY ACCOUNTING TEXT CHAP 20.

Why Record Transactions? To have a systematic recording of transaction  analyze  report to users Items that goes to Balance Sheet (Asset, Liability &

Chapter 4 Consolidation: Intragroup Transactions

1 Chapter 11 Reporting and Interpreting Owners’ Equity Acct 2301 Fall 09.

Corporations Chapter 12. Corporation Characteristics Is a legal entity, distinct and separate from the individuals who create and operate it. It may acquire,

1 1. Describe the nature of the corporate form of organization. 2. Describe the two main sources of stockholders’ equity. 3. Describe and illustrate the.

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Profit and Changes in Retained Earnings Chapter 12.

ACCOUNTING PRINCIPLES SIXTH CANADIAN EDITION Prepared by: Debbie Musil Kwantlen Polytechnic University Chapter 13 Introduction to Corporations.

CORPORATE FORM OF ORGANIZATION A corporation is a legal entity created by law that is separate and distinct from its owners.

18-1 CAPITAL STOCK CHAPTER Stock Stock A unit of ownership in a corporation is called a share of stock. Stock certificate Stockowners Investment.

CORPORATIONS: ORGANIZATION AND SHARE CAPITAL TRANSACTIONS CHAPTER 14.

CHAPTER 28 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.

DIVIDENDS. What are dividends? Dividends are distribution to shareholders of corporate earnings in proportion to the number of shares held by them. Distributions.

Copyright © Cengage Learning. All rights reserved. Chapter 11 Contributed Capital.

Chapter 16 LIMITED LIABILITY COMPANIES (LLC). LLC - General A limited liability company is any company whose capital is broken up into small amounts called.

ACCOUNTING PRINCIPLES Third Canadian Edition Prepared by: Keri Norrie, Camosun College.

Profit & Loss Account ACCOUNTING & FINANCE. Introduction and Key Definitions A statement recording all a firm ’ s revenues and costs within a past trading.

FINAL ACCOUNTS  All companies or corporations ( businesses owned by shareholders) must provide a set of final accounts consisting on three statements:

Depreciation of Assets. Depreciation – The systematic allocation of the cost of an asset over its useful life is called depreciation. For example, the.

Stockholders’ Equity Three primary forms of business organization The Corporate Form of Organization ProprietorshipPartnershipCorporation.

CENTURY 21 ACCOUNTING © Thomson/South-Western 1 LESSON 11-1 PART 4: CORPORATION ACCOUNTING Overview: PART 4  covers complete accounting cycle for a corporation.

1 Dividend Policy - Basics by Binam Ghimire. Learning Objectives  Forms of Dividend  Dividend Payment Chronology  Factors affecting Dividend Payment.

Proprietorships, Partnerships, and Corporations Chapter 8 Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 15 Part 1 DIVIDENDS A dividend is a distribution by a corporation to its shareholders on a pro rata (equal) basis. Dividends may be in the form.

RE-CAP What is a partnership? What is an advantage of becoming a partnership? What is a disadvantage of becoming a partnership? What document do you need.

WEYGANDT. KIESO. KIMMEL. TRENHOLM. KINNEAR. BARLOW. ATKINS PRINCIPLES OF FINANCIAL ACCOUNTING CANADIAN EDITION Chapter 13 Introductions to Corporations.

Chapter 17 Accounting for Co-operative Societies.

Financing Business. Finance decisions are probably one of the most important decisions managers have to make decisions on If financing is wrong then consequences.

Accounting and Finance Unit 4 Topic 4 Part B – Preparation of Company Financial Reports – Statement of Financial Position and Statement of Changes in Equity.

Accounting and Finance Unit 4

Chapter 9 Statutory Items Learning Objectives  1. Explain the unique characteristics of the corporate form of business.  2. Record transactions that.

Limited Liability Companies. Objectives Explain the various ways of raising capital; Explain the accounting entries for recording capital and appropriating.

Advanced Financial Accounting FIN-611

Adjustments, Financial Statements, and Financial Results

Corporations: Stock Values, Dividends, Treasury Stock, and Retained Earnings Chapter 19 2.

WEEK 2 – Lecture 2 Chapter two

Corporations: Paid-in Capital and the Balance Sheet

University of New Brunswick Memorial University of Newfoundland

Right Issue– MEANING The shares of a company are undoubtedly valuable where the issuing company has been either regularly paying handsome rate of dividend.

Learning objectives After you have studied this chapter, you should be able to: Explain, in the context of shares and loan notes, the difference between.

Brought to you by accountingrevision.com

Corporations: Organization, Stock Transactions, and Dividends

Corporations: Organization, Stock Transactions, and Dividends

Business combinations

Presentation transcript:

Brought to you by www.maxpapers.com Bonus Shares Brought to you by www.maxpapers.com

Brought to you by www.maxpapers.com Bonus Shares A bonus share usually has all of the voting rights etc as any other ordinary share A company usually rewards its shareholders by paying out dividends – a share of profits earned There are occasions where paying a dividend is not desirable e.g. Need to maintain working capital, maintain cash reserves for a planned project etc In these situations, a company can still reward shareholders by issuing bonus shares. Brought to you by www.maxpapers.com

Bonus Shares An issue of bonus shares must be shown in the profit and loss appropriation along with dividends, transfers to reserves etc. The journal entry to record the issue of bonus shares is: Dr Equity Reserve Cr Issued Capital The equity reserve that is debited could be - retained profit, current net profit, a general or any other allowable reserve The bonus issue can be thought of as a deferred dividend as the benefits to the shareholder are received once the share is sold Brought to you by www.maxpapers.com

Brought to you by www.maxpapers.com Bonus Shares ABC ltd started out on 1 Jan 2011 with authorised share capital of one million $1 shares. Of these, 200000 were issued. At the end of 2011 their after tax profit was $275 000. They decide to transfer $100 000 to the general reserve and make a bonus issue of 1 share for every 4 held. + 100 000 + 50 000 + 125 000 Brought to you by www.maxpapers.com

Brought to you by www.maxpapers.com Bonus Shares A bonus issue will dilute the value of each share – this is because each share now represents a smaller portion of the assets of the business This means that when bonus shares are issued, the share price of a listed company will often fall. A bonus issue can only occur if a company has sufficient authorised capital to make a bonus issue and it is allowable under the company’s constitution. This is to ensure the proportion of capital owned (and therefore voting rights) is not distorted. Brought to you by www.maxpapers.com

Brought to you by www.maxpapers.com Rights Issue A rights issue is an offer to existing shareholders to buy a certain number of newly created shares A rights issue is less expensive to administer than a share offer to the general public (public offer not available to a private company anyway). A shareholder may sell his/her right to purchase the new shares if they choose. Unlike in the case of a bonus issue, rights issue will increase the net assets of a company (cash is received). Brought to you by www.maxpapers.com