Good day ahead………….
We have purchased shares of a company as an investment only. We have purchased as lot by lot from the year 2005 onwards until year 2007 and it is now 110000 shares valuing USD 2.5 mn and we have got bonus shares of 10% of the holding on March 2008. Now we have sold 28000 shares on April 2008. All the shares we have purchased from share market only with different prices.
My issue is how I can co-relate the sale with the cost of investment, like first in first out or any other way….. Also, guide me how can I treat bonus share?? I can include proportionate bonus share also in the sold lot??
Bonus share will gooooining to reduce the cost of the share . This will have no impact on the financial statement when you receive them.
Now if you keep those shares as available for sale or Held for tradinf you have tp revalue them on market value and diffeernce in case of HFT goes to Income statement while HFS difference will go to equity section.
While the cost of purchase at diffefrent rates may be accounted for on FIFO basis when these shares are sold out