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Accounting for quantity of bonus shares received

14067 views 6 replies

Siddharth Zaveri

Mahavir Hydraulics Pvt Ltd

48 Points Posted on 18 January 2017

Dear Members,

How do I account for the quantity of bonus shares received by me?

I understand that no entry has to be passed on receipt of bonus shares. But say if I hold 500 shares of a certain company who has awarded bonus shares at 1:1, how do I account for the quantity of the 500 bonus shares received?

The only thing I can think of is go to each entry retrospectively and double the quantity retaining the investment cost but that is too cumbersome and volumnous. Is there any other way?

Thank you.

Replies (6)

Quick Summary

Bonus shares require no journal entry as received free. Quantity is increased in records while total investment value remains same, reducing per share cost. Disclosure can be shown as bonus addition in financials.

Ajit Hegde

CA - Final

1367 Points Posted on 19 January 2017

No entry has to be passed in books.

While preparing the financials, show as addition-bonus issue.

Nitesh jain

Preet Vihar

22 Points Posted on 19 January 2017

Bonus share issued by the company to the shareholder will not be accounted for in the books of investor ( No journal entry will be post). Since it is a free of cost, only we have to show increased quantity of share due to which it reduced per unit cost of investment.

Hiren Vira

Business

63 Points Posted on 02 February 2017

Dear Sir,

I want to know how can I increase the quantity of shares without accounting for it by account entry on receipt of the bonus shares. Please guide me. Thanks.

Hiren Vira.

Ajit Hegde

CA - Final

1367 Points Posted on 06 February 2017

For example, if you are using tally, there is no mention of no of shares anywhere.

You have to, while preparing the financials, show as addition during the year. Value will be zero. Accordingly basic and diluted eps calculations would change because of increase in no of equity shares

Velu

CA Practice

66 Points Posted on 01 May 2018

In opening screen go to Transactions - Inventory Vouchers - Now you will get Transfer of Material screen. Do not make any entry in Source (consumption). Go to Destination (Production) . Here you can enter name of the company, bonus shares (Qty). Do not enter any value. Then accept the entry. Now your stock qty would have increased by the bonus shares received.