Bonus/stock split
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Bonus/Stock split
Bonus
They are additional shares issues given without any cost to existing shareholders.
These shares are issued in a certain proportion to the existing holding. So, a 2 for 1 bonus would mean you get two additional shares -- free of cost -- for the one share you hold in the company.
If you hold 100 shares of a company and a 2:1 bonus offer is declared, you get 200 shares free. That means your total holding of shares in that company will now be 300 instead of 100 at no cost to you.
Stock split
A process by which a company divides the face value (the nominal value of a share) of its share is called stock split.
It is usually done in a ratio. On February 16, ABB announced a stock split in the ratio of 5:1. What it means is one share of face value Rs 10 will be split into five shares of face value Rs 2.
The overall effect for an investor holding the stock remains the same pre-split and post split.
The value of one share of face value Rs 10 (pre-split) with an investor is the same as five shares of face value Rs 2 (post split).
For instance, if a company has a market price of Rs 500 (face value Rs 10) and you have 10 shares of this company, then the total value of shares owned by you will be Rs 5,000.
Entering the Bonus And stock Splits in your books of accounts
- Click on eAccounts Icon
- As explained above in the note on Bonus And Split are the additional share given to you by companies without any cost so we can give purchases Voucher entry.
- Under the Equity Vouchers select Purchases Voucher
- Select the date
- Select the Portfolio
- Select the purchases accounts
- Select the company for which you have not received Bonus
- Enter the Quantity you have Received
- Enter the amount = 0 (As the bonus shares comes at no extra cost)
- Select the Broker’s A/c, amount = 0
- Select the STT A/c, amount = 0
- Select the Service Tax A/c, amount = 0
- Select the other Chg A/c, amount = 0
- Give Narration (Optional)
- Click on save.
See Also
Further Reading
For further related information on Stock Split please refer to Wikipedia Stock split
