Accouting Treatment (AS: 13)

Hi Raghav,

DIVIDEND :

Here u r receiving the amount, which is as such credited to the cost of investment. That means to that extent, ur cost of investment reduces.

BONUS SHARE :

While here, u dont receive any amount in ur hands. There is no decrease in ur cost, or rather increase in ur income. Its just that ur no. of shares increases (but capital remains same)..

Hey dude.. When bonus shares are issued, nothing has to be paid by the shareholder..Hence there is no question of any deduction from the cost of acquisition. Only during the valuation of shares its helpful..Suppose.......

You buy 10,000 shares @ 10 each. Your current investment value is Rs. 1,00,000. Suppose the company issues 1 bonus share for each share held, youi get 5,000 more shares at zro investment. So now, your total cost of investment is still Rs. 1,00,000 bt per share price drops to Rs. 6.67 / share (1,00,000 / (10,000+5,000)) as against the original Rs. 10/-

I hope your doubt is clear now..