B Com Exam > B Com Notes > Advanced Corporate Accounting > Accounting of Bonus Shares - Advanced Corporate Accounting
Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com PDF Download
The above entries make it clear that issue of bonus shares results in addition to share capital, of the company, but shareholder’s fund remains unchanged, because reserves are decreased by a corresponding amount. After bonus issue, other things remaining the same, the price of the shares will come down the total value of shares held by a shareholder will remain unaltered.
The issue of bonus shares can be profitable to the shareholders if the company maintains the rate of dividend per share after the issue of bonus shares as before. After the issue of bonus shares, shareholders will start getting more dividend as they are in possession of increased number of shares.
The imbalance between the lower amount of paid up capital and higher amount of net worth which is on account of accumulated reserves can be corrected by capitalizing reserves by issuing bonus shares. By the issue bonus shares the paid-up share capital will increase and will become representative capital in relation to the earning capacity. It will curb speculation in the prices of shares and as a result prices of shares of the company will stabilize.
Illustration:
The following are extracts from the Balance Sheet of Arihant Silk Ltd. as on December 31, 2008
A resolution was passed to issue 800 bonus shares of Rs. 10 each by providing Rs. 4,000 out of the P & L account and the balance out of the reserve fund.
Set out journal entries to give effect to the resolution and show how they would affect the balance sheet. (A.C.S., June 79)
The document Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com is a part of the B Com Course Advanced Corporate Accounting.
All you need of B Com at this link: B Com
|
89 videos|52 docs|22 tests
|
FAQs on Accounting of Bonus Shares - Advanced Corporate Accounting - Advanced Corporate Accounting - B Com
| 1. What is the accounting treatment for bonus shares? |  |
Ans. Bonus shares are issued by a company to its existing shareholders without any consideration. The accounting treatment for bonus shares involves transferring the appropriate amount from retained earnings to the share capital account. This increases the number of shares outstanding but does not have any impact on the total equity of the company.
| 2. How are bonus shares recorded in the financial statements? | |
Ans. Bonus shares are recorded in the financial statements by adjusting the share capital and retained earnings accounts. The number of shares outstanding is increased in the share capital account, while the value of the shares issued is transferred from retained earnings to the share capital account. This ensures that the financial statements reflect the increase in the company's share capital without affecting its total equity.
| 3. Can bonus shares be issued by any company? | |
Ans. Yes, bonus shares can be issued by any company that has accumulated profits or reserves. The decision to issue bonus shares is usually made by the company's management and approved by the board of directors. It is important to note that bonus shares cannot be issued if the company does not have sufficient retained earnings or reserves.
| 4. Are bonus shares taxable for shareholders? | |
Ans. Bonus shares are not taxable for shareholders at the time of issuance. This is because bonus shares do not involve any cash outflow or increase in the shareholders' wealth. However, when the bonus shares are eventually sold by the shareholders, they may be subject to capital gains tax, depending on the applicable tax laws and regulations.
| 5. How do bonus shares affect the market price of a company's shares? | |
Ans. Bonus shares generally do not have a direct impact on the market price of a company's shares. This is because the issuance of bonus shares does not change the underlying fundamentals of the company or its financial position. However, the increased number of shares outstanding as a result of bonus shares may lead to dilution of earnings per share, which can indirectly affect the market price of the shares.
Related Exams
About this Document
|
1.1K Views |
|
4.92/5 Rating |
|
Dec 23, 2024 Last updated |
Document Description: Accounting of Bonus Shares - Advanced Corporate Accounting for B Com 2024 is part of Advanced Corporate Accounting preparation.
The notes and questions for Accounting of Bonus Shares - Advanced Corporate Accounting have been prepared according to the B Com exam syllabus. Information about Accounting of Bonus Shares - Advanced Corporate Accounting covers topics
like and Accounting of Bonus Shares - Advanced Corporate Accounting Example, for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Accounting of Bonus Shares - Advanced Corporate Accounting.
Introduction of Accounting of Bonus Shares - Advanced Corporate Accounting in English is available as part of our Advanced Corporate Accounting
for B Com & Accounting of Bonus Shares - Advanced Corporate Accounting in Hindi for Advanced Corporate Accounting course.
Download more important topics related with notes, lectures and mock test series for B Com
Exam by signing up for free. B Com: Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com
Description
Full syllabus notes, lecture & questions for Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com - B Com | Plus excerises question with solution to help you revise complete syllabus for Advanced Corporate Accounting | Best notes, free PDF download
Information about Accounting of Bonus Shares - Advanced Corporate Accounting
In this doc you can find the meaning of Accounting of Bonus Shares - Advanced Corporate Accounting defined & explained in the simplest way possible. Besides explaining types of
Accounting of Bonus Shares - Advanced Corporate Accounting theory, EduRev gives you an ample number of questions to practice Accounting of Bonus Shares - Advanced Corporate Accounting tests, examples and also practice B Com
tests
|
Explore Courses for B Com exam
|
|
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
Related Searches
ppt
,video lectures
,study material
,Previous Year Questions with Solutions
,Exam
,Extra Questions
,Important questions
,past year papers
,Objective type Questions
,Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com
,practice quizzes
,MCQs
,Free
,Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com
,shortcuts and tricks
,Semester Notes
,Sample Paper
,Viva Questions
,Summary
,mock tests for examination
,Accounting of Bonus Shares - Advanced Corporate Accounting | Advanced Corporate Accounting - B Com
;
Additional Information about Accounting of Bonus Shares - Advanced Corporate Accounting for B Com Preparation
Accounting of Bonus Shares - Advanced Corporate Accounting Free PDF Download
The Accounting of Bonus Shares - Advanced Corporate Accounting is an invaluable resource that delves deep into the core of the B Com exam.
These study notes are curated by experts and cover all the essential topics and concepts, making your preparation more efficient and effective.
With the help of these notes, you can grasp complex subjects quickly, revise important points easily,
and reinforce your understanding of key concepts. The study notes are presented in a concise and easy-to-understand manner,
allowing you to optimize your learning process. Whether you're looking for best-recommended books, sample papers, study material,
or toppers' notes, this PDF has got you covered. Download the Accounting of Bonus Shares - Advanced Corporate Accounting now and kickstart your journey towards success in the B Com exam.
Importance of Accounting of Bonus Shares - Advanced Corporate Accounting
The importance of Accounting of Bonus Shares - Advanced Corporate Accounting cannot be overstated, especially for B Com aspirants.
This document holds the key to success in the B Com exam.
It offers a detailed understanding of the concept, providing invaluable insights into the topic.
By knowing the concepts well in advance, students can plan their preparation effectively.
Utilize this indispensable guide for a well-rounded preparation and achieve your desired results.
Accounting of Bonus Shares - Advanced Corporate Accounting Notes
Accounting of Bonus Shares - Advanced Corporate Accounting Notes offer in-depth insights into the specific topic to help you master it with ease.
This comprehensive document covers all aspects related to Accounting of Bonus Shares - Advanced Corporate Accounting.
It includes detailed information about the exam syllabus, recommended books, and study materials for a well-rounded preparation.
Practice papers and question papers enable you to assess your progress effectively.
Additionally, the paper analysis provides valuable tips for tackling the exam strategically.
Access to Toppers' notes gives you an edge in understanding complex concepts.
Whether you're a beginner or aiming for advanced proficiency, Accounting of Bonus Shares - Advanced Corporate Accounting Notes on EduRev are your ultimate resource for success.
Accounting of Bonus Shares - Advanced Corporate Accounting B Com Questions
The "Accounting of Bonus Shares - Advanced Corporate Accounting B Com Questions" guide is a valuable resource for all aspiring students preparing for the
B Com exam. It focuses on providing a wide range of practice questions to help students gauge
their understanding of the exam topics. These questions cover the entire syllabus, ensuring comprehensive preparation.
The guide includes previous years' question papers for students to familiarize themselves with the exam's format and difficulty level.
Additionally, it offers subject-specific question banks, allowing students to focus on weak areas and improve their performance.
Study Accounting of Bonus Shares - Advanced Corporate Accounting on the App
Students of B Com can study Accounting of Bonus Shares - Advanced Corporate Accounting alongwith tests & analysis from the EduRev app,
which will help them while preparing for their exam. Apart from the Accounting of Bonus Shares - Advanced Corporate Accounting,
students can also utilize the EduRev App for other study materials such as previous year question papers, syllabus, important questions, etc.
The EduRev App will make your learning easier as you can access it from anywhere you want.
The content of Accounting of Bonus Shares - Advanced Corporate Accounting is prepared as per the latest B Com syllabus.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup