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I also have other questions in Deltoid 🙁
1) point ii, bonus issue, how to understand the effect for cash flow
2) when calculating lease obligation, steps why not showing finance costs?Many Thanks.
bonus issue is an issue of shares for no consideration ie, it’s a FREE issue.
So there are no cash proceeds. However, the issue has to be financed from somewhere. Ideally, it will be by debiting share premium account. Otherwise, the debit will be from retained earnings. The question will make it clear so follow the instructions. If the issue is financed from share premium account, at the same time the share capital account is increasing, the share premium account will be decreasing. So we need to take the bonus issue into account when trying to calculate if there have been any proceeds from any subsequent share issue.
There’s a good little example in the ot notes
I don’t understand your second question “…obligation, steps why not ….?
What question are you asking?
Thanks, in this qn, it said bonus issue from share premium of one new share for every 10 hold. What I can understand now:
1) bonus issue amount: 8,000/10X1=800. Or it can be calculated: 4,000-3,200=800,even if one new share for every 10 hold not been told right?
2) if Dr. Share premium 800,Cr.Share Capital 800, does it mean for cash flow, bcoz it’s free issue, so the total increasing cash booking of share capital is c/f 10,000- b/f 8,000-800 that is for free? But it means cash flow of share premium decreasing?
3) just notice there is also retained earnings c/f 4,500, b/f 6,300. Why no cash flow decreasing from it?
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