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Please explain to me listed questions.
a) What is the accounting treatment for:
(1) Right issue
(2) Bonus issue
b) Why does bonus issue does not multiply by the time weighting factor?
a) (1) Rights issue – Dr Cash with the total amount received, Credit Share Capital with the nominal value of the shares issued, Credit Share Premium with the amount by which the exercise price exceeds the nominal value
a) (2) Bonus issue – Debit Share Premium Account (or any other distributable reserve or the Capital Redemption Reserve), Credit Share Capital Account
b) Are you talking here about an earnings per share question? It doesn’t matter whether you are or you aren’t, really. The bonus issued shares ARE multiplied by the time weighting. What makes you think they aren’t?
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