Accounting Entry

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Sonia (Querist)
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22 January 2009 Sir,
A is the Co. whose investment is in B co.(100 Share) had received the Bonus share (50 Shares).
The value of 100 shares is Rs100000.
when bonus received No entry has been passed.
Now A co. had sold the initial 100 shares @1000/shr.(at cost,No profit No loss).At what rate or price A co. Shows its remaining Bonus Shares(50 shrs).In short What value we show in Balance Sheet regarding that 50 shares.
PLease Answer.
Thank You.:)

Deepak Agrawal

Deepak Agrawal (Expert)
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22 January 2009 Dear Sonia, it will depend on valuation method opted by the company.

According to me, total investment should be valued.

So total cost will be 150 shares at Rs.100000

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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22 January 2009 Yes, I do agree with CA. Deepak Agrawal. The balance of shares should be valued at average cost price. Remember AS2 is not applicable to persons dealing in securities. Moreover, cost of acquisition of bonus shares is taken at NIL price for the purpose of Capital Gains which is not applicable for shares held as stock in trade.

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Sonia

Sonia (Querist)
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22 January 2009 Thank Yoy sir,
I am Fully satisfied with ur Answers But if the Co. follow the FIFO method then it that case what would be the VALUE..*(Ques in Reference to the DEEPAK Sir's Answer, that it Depends on the method of valuation followed/opted by the CO.)
Thanks to CA DEEPAK SIR
& CA RAMESH KUMAR AHUJA.