Shares and Securities Flashcards
How are quoted shared disposed of by way of a gift?
Valued at the mid-price based on the quoted price on the disposal day
Why is quoted price on the disposal day needed?
Proceeds to calculate chargeable gain or loss
What are the matching rules for disposal of shares sold by individuals? (In order)
- Acquisition on same day
- Acquisition in next 30 days - FIFO basis
- Shares in the share pool
What does the share pool aggregate?
All purchases except those made on same day as disposal or within following 30 days
What must be kept track of when making computations which use the share pool?
Number of shares
Cost of the shares
What are bonus issues
Shares issued by a company in proportion to each shareholder’s existing holding
What happens when a company issues bonus shares?
The size of original holding is increased
Since bonus shares are issued at no cost?
There is no need to adjust the original cost
What is a rights issue?
An issue for cash to existing shareholders given in proportion to their existing shareholdings
What must happen with the right shares?
Must be allocated to the pool same way as bonus shares but there will be an adjustment to cost of the pool
When does a reorganisation take place?
Where new shares or a mixture of new shares and debentures are issued in exchange for the original shareholdings
The new shares in reorganisation?
Take the place of the old shares
If the new shares and securities are quoted in reorganisation?
Cost is apportioned by reference to the market values of new types of capital on first day quotation after reorganisation
