{"id":10158,"date":"2020-04-22T18:50:17","date_gmt":"2020-04-22T13:20:17","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=10158"},"modified":"2023-03-17T18:20:52","modified_gmt":"2023-03-17T12:50:52","slug":"accounting-for-right-and-bonus-issue","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/accounting-for-right-and-bonus-issue\/","title":{"rendered":"Accounting for Right and Bonus Issue"},"content":{"rendered":"\n

In order to raise the company\u2019s subscribed share capital, additional capital shares are issued by way of the Rights Issue. However, instead of issuing the shares to the public at large, the Company prefers to issue shares to its already existing shareholders in proportion to their existing holding. Further, issuing shares by way of the right issue<\/a><\/strong> is an exceptionally used scheme to increase the company\u2019s share capital.<\/p>\n\n\n\n

Next is the concept of Bonus Shares. These are those shares which are given to the shareholders as some additional shares, on the basis of the number of shares that shareholders hold in the Company. These shares are issued to the existing shareholders that too, without receiving any consideration from them. Further, the Bonus Shares results in increasing the marketability of the Company. The actual purpose behind the issuance of Bonus shares is to bring the company\u2019s nominal capital in line with the assets. <\/p>\n\n\n\n

In\nthis article, we will be discussing in detail about the right and bonus shares\nalong with the accounting treatment required for both.<\/p>\n\n\n\n

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Table of Contents<\/p>\n