Bonus issue
Bonus issue
What is the accounting treatment of a bonus issue in the books of the shareholder?
Re: Bonus issue
perhaps nothing?
Re: Bonus issue
More details are needed. How is the investment accounted for, and what are the underlying economics? For example, a bonus issue may be carried out in lieu of cash dividends, in which case it would go to P/L.
Re: Bonus issue
Even if it’s in lieu of a cash dividend my vague memory is it is still a net zero transaction? But it has been ages. I thought the view was a bonus issue (on the assumption it is going to all shareholders on a proportionate basis) is dilutive, ie reduced the value of the existing shares, by exactly the same amount as the bonus?
Re: Bonus issue
This is how I understand this operation, too. I was thinking about a scenario where a company carries out a bonus issue and makes a corresponding transfer from retained earnings to share capital. I wonder if this results in a net zero transaction or has a net positive effect on shareholders' claims. But honestly, I'm not sure.
Re: Bonus issue
I was thinking of the possibility where it's a bonus issue on a particular class of share only held by this investee which potentially could even mean control is received as a result, guess lots of possibility on more unlikely scenarios