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Why is the dividend adjusted against the cost of purchase and why the bonus and right issue is not adjusted?

Shaviri Reddy

CA Inter

★ 1K+

30-Apr-23 00:32

417

Answers (6)

Best Answer

Yes.. post acquisition dividend is an income (transfer to p&l acc). Pre acquisition dividend should reduce the cost of purchase. For this purpose it should be bifurcated.

Kavin Kumar

CA Inter

★ 2K+

30-Apr-23 07:12

*on shares acquired

Thread Starter

Shaviri Reddy

CA Inter

★ 1K+

30-Apr-23 00:33

He acquired those 5000 shares on 20.6.20x1 (current year), where as the dividends were related to previous year(dividends for the year ended 31.3.20x1). It is termed as pre acquisition dividends and should be reduced from the cost of purchase.

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Kavin Kumar

CA Inter

★ 2K+

30-Apr-23 06:04

Kavin Kumar

Is the dividend should be bifurcated between pre acquisition and post acquisition?

Thread Starter

Shaviri Reddy

CA Inter

★ 1K+

30-Apr-23 06:54

Kavin Kumar

Yes.. post acquisition dividend is an income (transfer to p&l acc). Pre acquisition dividend should reduce the cost of purchase. For this purpose it should be bifurcated.

Thank you 😊

Thread Starter

Shaviri Reddy

CA Inter

★ 1K+

30-Apr-23 09:49

Thread Starter

Shaviri Reddy

Thank you 😊

It's okay

Kavin Kumar

CA Inter

★ 2K+

30-Apr-23 10:42