Homepage
PR Newswire
13-11-2010, 01:48 PM
For me as an accountant, it's "substance over form", which means the substance of the transaction takes precedence over its form (i.e. what you call it). So stock splits or bonus issues essentially are the same from a financial perspective, as it sub-divides the number of shares into more shares.
Oh the par value of shares concept was also phased out some years ago, so this is not relevant any longer.
I can think of one minor difference - usually in the case of bonus issues, capital reserves may be transferred to share capital in the form of a book entry (no P&L or cash effect). For share splits, there is no such entry as the share capital itself is sub-divided into more of XY number of shares that's all. (where X is a multiple based on the split ratio and Y is the original number of issued shares)
Oh the par value of shares concept was also phased out some years ago, so this is not relevant any longer.
I can think of one minor difference - usually in the case of bonus issues, capital reserves may be transferred to share capital in the form of a book entry (no P&L or cash effect). For share splits, there is no such entry as the share capital itself is sub-divided into more of XY number of shares that's all. (where X is a multiple based on the split ratio and Y is the original number of issued shares)
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/