Register now or log in to join your professional community.
(a)Share-split
(b)Right Issue
(c)Bonus Issue
(d)All of the above
(e) Non of the above.
If the company liability is increase then obviously company faces the loss then they can't issue bonus, Right issue, share slipt.
so ans is (e).
The correct answer is (e)
In all the cases (a, b & c), the total number of shares increases and so the dividend liability.
Answer option (a)>>>>>>>>>>>>>>> Share-split
In share split though the number of shares increases the Paid up capital remain unchanged and the dividend payout remains the same.
In Right Issue and Bonus issue, the number of shares as well as Paid up capital increases and the New Rights shares and Bonus shares are eligible for pro-rata dividend at the time of declaration of dividend.
In fact, as a dividends liability, it will be raised because of the real increase in the obligation to be more for only the shareholders. In the given examples, all of them either do not cause an increase of the dividends liability , or cause increase in other liability which is not a dividends. So the correct answer is C.. all of he above.
(a)>>>>>>>>>>>>>>Share-split
Obviously Share split will not increase any additional liability.
Bonus issue does not result in increase in total dividend liability.
It depends on the dividend policy. If it is5% of face value. Then (a)Share-split is the only right answer.
(b) Right issue - (this is my guess)