Question
Which of the following is NOT an advantage of Bonus
issue by a company?Solution
A bonus issue is the capitalisation of the reserves of the company. It is the issue of fully paid up shares for free to the existing shareholders to share the profits of the company in a non-cash manner. The bonus issue is made out of the free reserves or securities premium reserve or the capital redemption reserve of the company. Since these reserve are already a part of the networth of the company, issue of bonus shares does not change the networth of the company
 For the current period, inappropriate capitalization is most likely to:
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