AASB 133 Requires a Bonus Issue Made During a Period

question 9

Multiple Choice

AASB 133 requires a bonus issue made during a period to be treated by:

• A) Removing the effect of the bonus issue by deflating the number of shares to the equivalent of the weighted average number of ordinary shares that would have been on issue in the period if the bonus issue had not taken place.
• B) No adjustment is required. the calculation of the weighted average number of shares issued during the period automatically takes into account the effect of issuing more shares.
• C) Increasing the number of shares issued before the bonus issue as if the bonus issue had been made at the beginning of the period. Previous period's earnings per share reported for comparative purposes also should be adjusted for the effect of the bonus issue.
• D) Calculating the earnings per share both by deflating the number of shares issued to pre-bonus issue numbers so that the earnings per share may be compared to previous periods and also calculating the 'post-bonus issue' earnings per share as a basis for continuing comparison in future periods.
• E) None of the given answers.

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Definitions:

Capital Budgeting Project

The process of planning and managing a company's long-term investments in projects and assets.

Lessee's Debt Cash Flows

This term pertains to the cash flows related to the debt a lessee incurs, typically in the context of financing leases, showing how lease expenses affect the lessee's overall financial situation.

Residual Value

The market value of the leased property at the expiration of the lease. The estimate of the residual value is one of the key elements in lease analysis.

Financing Decision

The process of making choices about obtaining capital and using it to fund business activities, including investments and operations.