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Accounting for Limited Companies
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Plz give me full detailed answer. Thanks
(all the figures below are in millions!)
First they have a 1 for 2 bonus issue. As there are currently 100 shares in issue, this means that they issue another 50 shares (so the total number of shares is now 150).
Since they are $1 shares, the share capital increases by the nominal value of 50 to a total of 150. Because it is a bonus issue, the share premium reduces by 50 to 30.
Then they have a 2 for 5 rights issue. As there are 150 shares in issue after the bonus, this means that they issue another 2/5 x 150 = 60 shares.
The share capital increased by the nominal value of 60 to a total of 210.
The share premium increases by the excess of the amount paid above the nominal value – i.e. 60 shares at 0.50 = 30. The balance was 30 after the bonus issue so it increases by another 30 to a total of 60.
Can someone plz let mw know about test question 5 ? How to solve a question which has first bonus issue and then rights issue? Plz give explanations of each step. . Thanks
Have you checked the answers at the back of the course notes ?
Yes…I did but there is no explanation in the answers.
Hi,
Can you please explain test Q 4 please?
Thanks.
For example 2 right issue is @ $3 why not 2000@ $3??
It is mention as 2000@ $2??
Test Q 4 – The answer per the notes is D (dividends dont appear on the Income Statements or Bal. Sheet. I know they dont appear on the Income Statement, but I was pretty sure dividends form part of the retained earnings? So why is the answer nil in this case? Thanks in advance.
Oh, and lectures are a really great help. Many thanks!
Dividends certainly reduce the retained earnings, but they do not appear as a separate item on the Balance Sheet – they appear in the Statement of changes in equity
This chapter is my weakest area!!!
Can someone please explain question 2 in the Tests Please
@nhs14, Have you looked at the answers on page 200 of the Course Notes?
@johnmoffat,
yeah I don’t know how to get the 750 000
@nhs14, At the start of the year there were 500,000 shares in issue. They then had a rights issue of 1 for 2, which means that they issued 1 new share for every two existing shares – i.e. they issued another 250,000 shares. This means that they then had 750,000 shares in issue.
@johnmoffat,
Thank you very much
Nice Explaintion but nt like other chapters some topics are missing Like
Ordinery share and prefrence share Loan stock Revlauation surplus etc anyways thanks alot
@mohammadbangash, The lecture makes it clear at the beginning that it will not read the course notes to you – you must read them properly yourself.
Ordinary and preference shares are dealt with in paragraph 4 of the notes; loan stock is dealt with in paragraph 8; and revaluation surplus is dealt with in paragraph 6 (and also in the earlier chapter on depreciation).
great lecture!!!!!!!!!
can somebody help me with the following qns
how do we treat rights issue, if their payment consideration is below nominal value e.g if nominal value is $2/share and there is a rights issue at $1/share
@hwaliji, a rights issue will usually be at less than the market value per share, but it can not be at less than the nominal value.
@hwaliji, It would actually be illegal to issue shares – whether an original issue or a further rights issue – for an amount less than their nominal value! They can be – and invariably will be – issued at a price which represents a discount on their market value, but NEVER at a discount on nominal value
I’m so please and grateful for knowing this site. thanks to the team in place. please can someone help me with BPP notes
it is really helpful,,,, thanks
This is very helpful, thank you Open Tuition.l
It helped alot but please give us intro of debenture loans, dividends and bonus issue
share us complete chapter
very helpful
like this
this has been explained very well indeed.. The best part about this video is that incase you didn’t understand something the first time you can always go back and confirm it
Wonderful Explaination
I am thankful to opentuition.com as well as my friend who told me about this site.
I am happy i found OpenTution