ACCA · Question 23 · Preparing basic financial statements
Section A
A company makes a 1 for 4 bonus issue of shares. Prior to the issue, the company had 200,000 $1 ordinary shares and a share premium account balance of $60,000. The company wishes to utilize the share premium account as much as possible.
What is the impact of this bonus issue on the total equity of the company?
Answer options:
Total equity increases by $50,000
Total equity decreases by $50,000
Total equity remains unchanged
Total equity increases by $10,000
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