On 31 december 2004 the shareholders equity section of the, Ask an Expert

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On 31 December 2004, the shareholders' equity section of the balance sheet of XYZ was as follows:

Capital issued - ordinary shares 1,000,000 at EUR 5 par EUR 5,000,000
Share premium reserve EUR   20,000,000
Retained earnings EUR   75,000,000
Total equity    EUR 100,000,000

At the shareholders' general meeting that took place in April 2005, dividends for EUR 10 million were declared. Moreover, it was decided to issue new shares for EUR 12 million by way of a bonus issue (i.e. by converting share premium reserve into share capital).

(a) How would the shareholders' equity section be affected?

(b) Show also the impact on the accounting equation of these transactions.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92094420

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