#11 Bonus Issue of Shares
A bonus issue of shares also mobile value for money as a scrip issue or a capitalisation issue is an issue of new shares to existing shareholders, in proportion to their existing shareholding, for no cost or consideration.
Why does a company issue bonus shar es?
A bonus issue of shares is different to a rights issue or a standard issue of new shares.
The company receives no extra money for these shares, so they do nothing to generate additional revenue or profits.
If additional good paypal transfer money to friends bank account magnificent are issued for no money, the comparative figures might be misleading.
How is a bonus issue of shares is different to a rights issue or a standard issue of new shares?
This would cause your EPS figure to halve overnight, leading investors and creditors into a wild and frenzied panic as they think your company is going down the tubes.
To stop this from happening, and to ensure the EPS figure is comparable with last years, IAS 33 requires the weighted average number of shares should be calculated as if the bonus shares had always been in issue.
So we adjust the proportionate number of shares outstanding as if the bonus issue had occurred at the beginning of the earliest period presented.
Now if we know that bonus issues and share splits are treated retrospectively.
EPS adjustment for bonus issues How does this affect us in the exam?
If we offer shareholders a 2 for 1 split, we pretend the split happened at the start of the year, and also adjust our previous figures, pretending they were split since the start of time.
No matter what time of the year it took place.
When you're looking at EPS you'll also come across a ratio called the price-earnings ratio.
What is the Price-Earnings Ratio?
The price-earnings ratio is is an important stock market ratio, which compares the current market price.
Definitions of Rights issues, Options and Warrants A rights issue is where a company offers existing shareholders a chance to buy new shares in the company at below market rates at a future date.
Although earnings per share is a very popular performance measurement tool, it is not mobile value for money its drawback and limitations.
Here are four important drawbacks you should know for your IAS 33 EPS studies.
In this article, we're going to take a look at the presentation for Earnings per Share under IAS 33.
Presentation The basic EPS and diluted EPS from continuing operations should be presented in the statement of.
Why do learn more here need to know how to calculate Earnings per Share?
Investors love to use the earnings per share calculation when assessing a company's performance.
Because it's a quick and easy way to get.
IAS 33 allows companies to present an alternative measure of EPS Earnings per Share in addition to the standard basic and diluted EPS presented.
Sometimes companies will do this if they have large or.
IAS 33 Earnings per Share can be a tricky topic to grasp.
You might find it easier to study IAS 33 using one of our quizzes.
The quiz is available by clicking here.
The following disclosures are required under IAS 33 Earnings per Share: The earnings figure used for the calculation of basic and diluted Accounting bonus issue />If this is different to the amount contained in the profit or.
Earnings For the purpose of calculating basic earnings per share under IAS 33, earnings is the net profit after deducting: Tax Non-Controlling Interest Minority Interest Non-controlling interest So earnings is the net profit after tax minus any minority.
Basic earnings per share is calculated by dividing the net profit or loss on continuing operations by the weighted average number of ordinary shares in issue during the period.
Ordinary Shares An check this out share is an equity instrument that is subordinate to all other classes of equity instrument.
They participate in profit for the period only after other types of shares, such as preference.
Earnings are profits available for ordinary equity shareholders.
What are Earnings per Share?
Earnings per share is a measure of the mobile value for money of earnings in a financial period for each ordinary share.
EPS and Investors Investors.
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Bonus Shares - Concept & Problem Solving - CA
If you issue the bonus as a separate payment, you can withhold the taxes at the standard rate or select a flat 25 percent withholding.. you must recognize the expense in the current accounting.
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