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[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”center” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”http://www.frs102.com/members/premium-toolkit/” type=”big” color=”red”] Return to Main Index[/button] [/et_pb_text][/et_pb_column][et_pb_column type=”1_2″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”center” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”http://ie.frs102.com/members/premium-toolkit/section-22/” type=”big” color=”red”] Return to Section 22 Home[/button] [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Main Body Text” background_layout=”light” text_orientation=”justified” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]Exercise of options, rights and warrants
Extract from FRS 102 – Section 22.11
22.11 An entity shall apply the principles in paragraphs 22.7 to 22.10 to equity issued by means of exercise of options, rights, warrants and similar equity instruments.
OmniPro comment
The effects of options and rights have been illustrated in the examples above.
Capitalisation or bonus issues of shares and share splits
Extract from FRS 102 – Section 22.12
22.12 A capitalisation or bonus issue (sometimes referred to as a stock dividend) is the issue of new shares to shareholders in proportion to their existing holdings. For example, an entity may give its shareholders one dividend or bonus share for every five shares held. A share split (sometimes referred to as a stock split) is the dividing of an entity’s existing shares into multiple shares. For example, in a share split, each shareholder may receive one additional share for each share held. In some cases, the previously outstanding shares are cancelled and replaced by new shares. Capitalisation and bonus issues and share splits do not change total equity. An entity shall reclassify amounts within equity as required by applicable laws.
OmniPro comment
The example below illustrates the above point. Where a share split occurs the number of share only changes, the equity balance does not.
Example 16: Capitalisation/bonus issue
Company A had significant distributable reserves. Prior to the issue the company had 100,000 shares of CU1 each. Profit and loss reserves total CU3,000,000 at the time of the issue. During the year the company decided to capitalise CU500,000 from profit and loss reserves to the appropriation of the said sum as capital to the holders of the 100,000 Ordinary Shares of CU1 in the capital of the Company. The journal required to reflect this transaction in Company A’s books is:
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|
CU |
CU |
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Dr Ordinary Share Capital |
500,000 |
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Cr Profit and Loss Reserves |
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500,000 |
Being journal to reflect capitalisation of shares
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