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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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