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i did one question which had a starting number of shares, then an ordinary issue was made during the year and then a bonus issue was made immediately after this ordinary issue.
and the number of bonus shares was computed using the WEIGHTED AVGs and not the actual shares.
so i said ok…
then i do the next question, where there is a starting number of shares and during the year only a bonus issue is made.
so i used the weight avg to compute the bonus shares but that was wrong. the answer had the actual bonus shares computed normally.
why is there a difference in computing bonus shares?
I don’t know – where was the question from? Is it from opentuition material?
these are actually 2 mcq from bpp:
1. waffle had share cap of 7.5m in 50c equity shares at 1 oct x6. on 1 jan x7 it made an issue of 4 million shares at full market price immediately followed by a 1 for 3 bonus issue
answer:
b/f 7.5m/.5————- 15m
4m x 9/12 ————– 3m
bonus (18/3)———— 6mbut did it as follows:
b/f ———– 15m
issue ——– 4m
—————- 19m
bonus ——– 6.3m
—————- 25.3mthen the next question is as follows:
P had 4m shares throughout ye 31 mar x7. on 30 sep x7 it made a 1 for 4 bonus.
the calculation for this is simply:
b/f —— 4m
bonus—-1m
====================the difference between the 2 is an ordinary issue of new shares before a bonus in the first question.
why are we not applying time fractions in the second question? like i did below:
4m x 6/12 = 2m
bonus (2m/4) = .5mIn my tabular layout (D. N. P. F. W.) the answer to question 1 would be:
1.10.x6 15,000,000 3/12 4/3 5,000,000
1. 1.x7 19,000,000 9/12 14,250,000
1. 1.x7 6,333,333 9/12 4,750,000giving a WANES of 24,000,000
For question 2, it’s as follows:
1. 4.x7 4,000,000 6/12 5/4 2,500,000
1.10.x7 5,000,000 6/12 2,500,000giving a WANES of 5,000,000
Does that make any sense to you?
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