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Cash flow statement

Shobhit popli (Student) (24 Points)

22 April 2015

what would be the effect of bonus shares issued in operating activity?? will it be added back if profit n loss is used to issue bonus shares??

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7 Replies

Nitish Agrawal (CA) (810 Points)
Replied 22 April 2015

I think yes it should be added back as it is a financial activity i.e.non operating.....let's see what others have their opinion on it.....

Saurabh Goyal (Professional Practice ) (56 Points)
Replied 22 April 2015

I agree with Nitish.

AAS MOHAMMAD (student) (86 Points)
Replied 22 April 2015

I think bonus share issue would no be represent in cash flow statement as it is a non cash item..

vijay krishna (Student) (42 Points)
Replied 22 April 2015

Issue of bonus shares is a financial activity. There is an increase in share capital but there is no cash inflow as bonus shares are issued free of cost. So NO effect in cash flow statement.

Dvs.gayathri (student) (21 Points)
Replied 22 April 2015

If bonus shares are issued out of profit n loss account it should be add back to net profit in cash flow statement since it is a non cash item(even though non operating) and it is shown at no other place in cash flow statement.. pls correct me if im wrong

vijay krishna (Student) (42 Points)
Replied 04 May 2015

@ dvs.gayatri Issue of bonus shares is capitalisation of profits. Even if the company utilises P&L A/C credit balance in issuing bonus shares, there will be no effect in P&L A/c since it is APPROPRIATION of profits and not CHARGE. So no change in P&L A/c and no change in cash flow. This is my opinion. Don't know how far it is correct.

(Guest)

Their will not be any effect on cash flow statement not it to be added back in operating activity if we startup with profit after tax in operating activity that means appropriation for bonus shares in not adjusted in it(since bonus shares issued is appropriation and is adjusted from p&l appropriation a/c in b/s), so no need to add it back