how do i record a corporate acquisition with a cash component? i.e. Evolution mining/Phoenix Gold
How do I manage this?
I'm using Personal Plus 2015
Thanks in anticipation!
Comments
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Others may have a better idea, but for me the 4 issues that come to mind are:
- make sure the number of shares in your holding is correctly adjusted.
make sure the capital value of your holding is correctly adjusted.
Is this a capital gains event and is this information noted in the transactions.
do these transactions provide a history of the change of capital value and number of shares in your holding (good if you can)
There are a number of transactions that you can use to achieve this:
Stock split or Add/Remove shares to adjust the number of shares you hold,
Return of capital (+/-) to adjust the capital value of your holding, or
Buy / Sell shares to adjust both the number of shares and the total capital value of your holding,
I am cautious to use stock split as if you hold this share in multiple accounts, the one split transaction can apply to all accounts, with strange numbers of shares resulting.
I first try to do these transactions in a spread sheet to see the effect on capital and share numbers then perform in RPP when ok. It is good to see what makes the best sense of what is being done. It is best to do it as soon as you have the information available, although this can be too late.
The only recent time I failed to do this correctly was the June 2014 restructure to Westfield/Retail to Westfield/Scentre where share numbers and capital were shared between the 2 holdings. Sometimes it gets too hard ! (or I was too lazy)
I also recently sold some GPT shares, which I have unfortunately held for many years. Estimating the revised capital value of those shares when selling is going to be a nightmare. You just have to do the best you can. Who is going to check that one ? I don't know why the ATO allow the non-taxable dividends that some companies pay, especially when they should be applied to the capital value of the shares.
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Hi Lea, John,
I have prepared a guide to processing this takeover here.
There are some components of the takeover which makes it difficult to offer an authoritative guide and two alternative approaches are suggested. Both have some faults.
I would appreciate you letting us know your thoughts.
regards,
John
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Hi John,
I've only just had a chance to look at this. I'm not sure if I have done this correctly as I have a large amount left in the takeover account (~1200 in negative)
Entitled to 3000 shares and $3375 with a cost basis $4769.95. Have I done this correclty? If so, not exactly sure what you mean by "Investment Cost or Investment Benefit account"
thanks,lea0
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