Bonus issue and share split

Learning objectives

• Calculate the restated number of shares after a bonus issue or a share split (as if it had occurred at the beginning of the earliest period presented).L2, L3
• Explain why events that change the number of shares without a corresponding change in resources adjust the number of shares for all periods presented.L2

Normative references

• IAS 33 §26The weighted average number of ordinary shares for the period and for all periods presented is adjusted for events, other than the conversion of potential ordinary shares, that have changed the number of shares outstanding without a corresponding change in resources.
• IAS 33 §27Events concerned: (a) a capitalisation or bonus issue (stock dividend); (b) a bonus element in any other issue, for example a bonus element in a rights issue to existing shareholders; (c) a share split; (d) a reverse share split (consolidation of shares).
• IAS 33 §28In a bonus issue or a share split, ordinary shares are issued to existing shareholders for no additional consideration: the number of shares increases without an increase in resources, and the number of shares outstanding before the event is adjusted as if the event had occurred at the beginning of the earliest period presented.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

4 questions

• Castel SA has {shares_before_event} ordinary shares outstanding throughout the year until a bonus issue by capitalisation of reserves on 1 September of one new share for four held: no new resources enter the entity. The profit attributable to ordinary equity holders for the year is {earnings_ordinary} (in euros). Calculate the number of shares restated for the bonus issue for the year's calculation, then basic earnings per share. Round earnings per share to two decimals (case convention).L2
• Bréval SA has {opening_shares} ordinary shares at 1 January. On 1 April it issues {cash_issue_shares} shares for cash, outstanding {cash_issue_months} months until 31 December. On 1 October it makes a bonus issue of one new share for two held, with no new resources. The profit attributable to ordinary equity holders for the year is {earnings_ordinary} (in euros). Calculate the weighted average number of shares for the year, restated for the bonus issue (weighting in months), then basic earnings per share. Round earnings per share to two decimals (case convention).L3
• In a recap note on the bonus issue of shares made by Orléans SA on 1 October, which sentence is incorrect?L3
• Which of the following transactions on the share capital of Montaigne SA are among the events for which the weighted average number of shares for the period and the periods presented is adjusted because they change the number of shares without a corresponding change in resources? More than one answer is possible.L3