plz let me know the exact meaning of DIVIDEND EQUILISATION in MUTUAL FUND chapter???
what is its use???
as it also came in nov-11 F.R exam ...
CA S.VIJAY NARERNDRA (CA,M.COM,CS final) (132 Points)
05 February 2012plz let me know the exact meaning of DIVIDEND EQUILISATION in MUTUAL FUND chapter???
what is its use???
as it also came in nov-11 F.R exam ...
Boss it is used when units are issued between the year.....to equlaise the distibution at the end of the yr....EG. Profit made till 6 months Rs100 members 10....now..new units isssed after 6 moths of the year has passed say 10 more units...at the year end total profit 300 (therefore profit for next 6 months 200)
Fair distibution shoul be 100/10=10Rs for first 6 months+200/20=Rs10 for next 6 months
thuse membes holding 10 units for 12 months hould get Rs. 20 (10+10) and thous holdin for 6 months should get R10 (for later 6 months only
hoever practically dividnd is distributed to all members on total profits/ no of units
300/20=Rs.15 each the holder for 12 monthes are getting more than what they desv nad those for 6moths more then what they diserv
furthe there may be multiple issues...situations and calculations may not be so simple
so we collect an extra amt for the profits made upto the date(RS 10per unit) from the new unit buyers
so for new 10 units we collect Rs100 extra over and above the price
so at the year end total profits =profits +Div Eqlisation =300+100
the distibution will be 400/20= Rs 20 each
The holedrs for 12 months are getting correct amt
those holding for 6 monts are getting "desrving profit+what they paid extra " 10profit +10upfront payments=20
Fair enough
CAclubindia
