Chapter 10: Shares

Question 1

Matching rule shares

Answer 1

1. Same day acquisitions
2. Shares acquired in the following 30 days
3. Share Pool (all other shares acquired up to the day before the disposal)

Question 2

The Share Pool

Answer 2

Collects together all of the shares purchased prior to the date of disposal and calculates an
average’ cost

Must have a column for date of purchase. another column for the number of shares which is added to get a cumulative number and a column for cost which is added to give a cumulative cost of shares held in the pool

Question 3

Share pool disposal

Answer 3

Cost x (Np. of shares disposed of / total number of shares)

Question 4

Bonus issue of shares

Answer 4

Free shares which are given to existing shareholders.

Given in proportion to their existing shareholding

Number of new shares must be considered when calculating gains

In the share pool - the number of shares will increase but the cost will stay the same

Question 5

Rights of issues shares

Answer 5

Existing shareholders are offered new shares by the company but this time the shareholder has to pay for them.

Rights issues add to number of shares and cost of the shares

Question 6

next 30 days disposal of shares are on what basis

Answer 6

FIFO

Question 7

disposals

Answer 7

only interested in disposals in the year