The issuing of bonus shares in lieu of a cash dividend would be separately disclosed in an entity's:
A) statement of financial position.
B) statement of comprehensive income.
C) statement of changes in equity.
D) statement of cash flows.

Question

Quizplus · Accepted Answer

Bonus shares are issued as a means to distribute profits to shareholders without providing a cash dividend. Therefore, the bonus shares issue would be disclosed in the statement of changes in equity, which outlines the changes in equity during the period, including any distributions, stock issuances, and other transactions affecting equity. Option A, statement of financial position, reports an entity's assets, liabilities, and equity at a particular point in time. Option B, statement of comprehensive income, reports an entity's revenues, expenses, gains, and losses for the period. Option D, statement of cash flows, reports an entity's cash inflows and outflows during the period. While bonus shares may have an impact on an entity's cash flows or comprehensive income, these are not the appropriate disclosures for this transaction.

The Issuing of Bonus Shares in Lieu of a Cash