PTC - Bonus and Rights Issues

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I get muddled up with this every time! <BR><BR>Is it that with a bonus issue u just add to the original purchase, so there is no indexation and with rights issues you act as if it was a new share purchase and index from and to that date?<BR><BR>Do you index the whole share pool up to the rights issue date?<BR><BR>Anyone else having problems remembering it all??

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    PTC - Bonus and Rights Issues

    hi, bonus shares you do not index, think of it as there is no money changing hands so not altering the cost. <BR>rights issues are money involved ( it norm gives a clue in the question as it says 1 for 2 @£4.00 each.<BR>you index from the date of last movement to the date of rights issue the amount in your index cost column ( you should have three columns, no. of shares, cost and index cost)<BR>if you remember money movements index none money dont index<BR><BR>be careful in exam as they may give you index figure for a bonus issue to confuse you.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    PTC - Bonus and Rights Issues

    In BTC this week they gave us the index for a bonus issue to try and trip people up.<BR><BR>Easy way to remember is a bonus is exactly that - something for nothing!<BR><BR>Good luck for PTC<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    PTC - Bonus and Rights Issues

    Thanks for your replies :-)<BR><BR>One more question - when does the taper relief apply from? I thought that because the share pool is created up to April 1998, the full 7 years taper relief would apply - is this right?<BR><BR>I'm having a last minute stress before the exam tomorrow!!<BR><BR>At least in my head I now know bonus = just increase no of shares, no other change and rights issues = treat like a share purchase and index from and to.<BR><BR>The only thing is, in my book it says that rights issues are treated as if purchased with original shares - so is there any different treatment when they are disposed of?

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