Bonus and rights issues
You'll learn the key differences between bonus issues and rights issues, and how to account for each using double-entry bookkeeping. Bonus issues involve giving existing shareholders free shares proportional to their current holdings, funded from reserves like share premium.
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In this lesson
- 0:00 Bonus issues: definition and purpose
- 0:36 Bonus issue advantages and disadvantages
- 1:23 Accounting treatment for bonus issues
- 2:37 Bonus issue worked example
- 5:05 Rights issues: definition and mechanics
- 5:52 Rights issue advantages and disadvantages
- 6:28 Accounting treatment for rights issues
- 7:23 Rights issue worked example
About this lesson
Rights issues allow shareholders to purchase new shares at below-market prices, generating cash for the company. This video covers the journal entries, advantages, and disadvantages of both methods, essential knowledge for FR and SBR papers where share capital transactions are frequently examined.
Duration: 9m
Transcript
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