Re: Capital Increase
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Posted by Mark on June 04, 1999 at 08:31:49:
In Reply to: Capital Increase posted by George Argyrakis on June 04, 1999 at 06:58:32:
: Hello,
: My name is George and I'm trying F.M. in Greece.
: I have this problem. : For example I have 100 shares at June 3.
: (Closing price 100$).
: The company decides for a capital increase
: for old shear holders and gives 1 new shares
: for every 5 old at 30$ each beginning at June 4th. : Is this the correct way?
: Reinvested Distribution at June 4th: 20 * 30 = 600$.
: New Shares: 120 : So far so good. But the old price
: (June 3 and going back)
: is not adjusted as it does with a split. : It should be changed to something like this:
: round ( ( 100 + 30/5 )* 5/6 ) = 88 : I am doing something wrong or what? : Thanks
: George Hi George,
The way you record this depends on how
the shares are distributed. If it was a taxable
distribution that you then took the money, and
repurchased the 20 shares, then you would do it
as you have done. This method increases your
tax cost basis. On the other hand, if it
was a split, you would record it as a split,
keeping your cost basis constant. You can
record a "6 for 5" split. Thanks,
Mark
--
Mark Beiley
Fund Manager for Windows 3.1x/95/98/NT
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