Bonus Issue ► Bonus shares are issued to the existing shareholders (on a pro-rata basis) for free ► In essence, a bonus issue results in the same pie (the existing equity) being cut up into more pieces (shares outstanding), with each shareholder holding the same proportion of the pieces as before the share issue. ► From a shareholder's viewpoint, his or her shareholding remains unchanged except that now the shareholder owns a greater number of shares in the company.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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What does it mean?

Bonus Issue
► Bonus shares are issued to the existing shareholders
(on a pro-rata basis) for free
► In essence, a bonus issue results in the same pie (the
existing equity) being cut up into more pieces (shares
outstanding), with each shareholder holding the same
proportion of the pieces as before the share issue.
► From a shareholder's viewpoint, his or her
shareholding remains unchanged except that now the
shareholder owns a greater number of shares in the
company.
Transcribed Image Text:Bonus Issue ► Bonus shares are issued to the existing shareholders (on a pro-rata basis) for free ► In essence, a bonus issue results in the same pie (the existing equity) being cut up into more pieces (shares outstanding), with each shareholder holding the same proportion of the pieces as before the share issue. ► From a shareholder's viewpoint, his or her shareholding remains unchanged except that now the shareholder owns a greater number of shares in the company.
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