Page 186 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 13

Illustrations and further practice

Now try question TYU 1 and TYU 2 from Chapter 13 of the Study Text.

2.3 Bonus issue

A bonus issue is a 'free' issue of shares to current shareholders in proportion to their
existing shareholding i.e. the company receives no cash or any other consideration in
exchange for the share issue.

The debit entry can be made to any equity component account, such as share
premium or revaluation surplus and either those accounts will normally be used,
rather than retained earnings. The accounting entries to record a bonus issue would
be:

Debit Share Premium/Revaluation surplus/Retained earnings (nominal value per
share × no. of shares)

Credit Share capital account (nominal value × no. of shares)

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