Accountancy Forum

Company A own 300 shares (100%) in Company B.

Company B made a bonus issue of 13

Number of shares held by Company A in Company B
Before bonus issue – 300 shares
After bonus issue – 400 shares

How will Company A accounts for the Bonus issue in its financial statements?
Which Accounting Standards (IFRS) governs the accounting treatment of bonus shares?

Please help.

Thanks

Rafick )

There is no accounting entry for receipt of bonus shares by an investor.

Dear,
Company A shall not be required to make any entry on account receipts of bonus shares, since these shares shall not increase the net worth of company B because these shares are issued by capitalization of accumulated profits, i.e. bonus shares are movement in equity of issuing company.
However, it shall augment the number of shares held in company B by company A, and the same is required to be disclosed by company A in its financial statements.
For reference, exhibit IAS 27, 28 and IFRS 3


Best Regards,

Thank you very much indeed for your input.

Rafick )