investment account
Isha Nisha Johar (63 Points)
01 March 2018
where will be sale of bonus share recorded?
Isha Nisha Johar (63 Points)
01 March 2018
sk
(student)
(82 Points)
Replied 02 March 2018
Balaji Ramalingam
(Student - CA Final)
(285 Points)
Replied 02 March 2018
satish
(teaching)
(2046 Points)
Replied 02 March 2018
while preparation of investment account, if investment in shares, we need to follow weighted average cost method.
sale of bonus shares are credited to Investment a/c.
Cost of bonus sahres is to be calculate under weighted average cost method.
difference is considered as profit or loss on sale of Bonus shares.
Isha Nisha Johar
(63 Points)
Replied 02 March 2018
satish
(teaching)
(2046 Points)
Replied 02 March 2018
number of shares column and Amount column only.
Isha Nisha Johar
(63 Points)
Replied 02 March 2018
satish
(teaching)
(2046 Points)
Replied 02 March 2018
Number of shares held originally = 100 shares
Bonus announcement = 1:1
Purchase price = Rs 50/- per share
Number of Bonus shares = 100 shares
Cost of original sahres = (100 shares x 50/-) = 5,000
Cost of Bonus shares (under weighted average cost method) = (total cost / total number of shares after bonus) x Number of bonus shares
= (Rs. 5000 / 200 sh) x 100 sh = Rs. 2,500
trader wants to sell the bonus shares at Rs. 30/- per share
Sale proceeds of bonus shares = Rs. 3,000
(100 shares x 30)
Less: cost of bonus shares = Rs. 2,500
Profit on sale of Bonus shares 500
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