Re: Re: Capital Increase
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Posted by George on June 05, 1999 at 00:23:16:
In Reply to: Re: Capital Increase posted by Mark on June 04, 1999 at 08:31:49:
: : 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$.
: : New Shares: 120 : : So far so good. But the old price
: : (June 3 and going back)
: : is not adjusted as it does with a split. : : It should be changed to something like this:
: : round ( ( 100 + 30/5 )* 5/6 ) = 88 : : I am doing something wrong or what? : : Thanks
: : George : Hi George,
: The way you record this depends on how
: the shares are distributed. If it was a taxable
: distribution that you then took the money, and
: repurchased the 20 shares, then you would do it
: as you have done. This method increases your
: tax cost basis. : On the other hand, if it
: was a split, you would record it as a split,
: keeping your cost basis constant. You can
: record a "6 for 5" split. : Thanks,
: Mark
: -- Thanks Mark for your reply The split could be an answer, but it doesn't work
by it self.
I also have to pay for the new shares. In the other hand a similar problem is
with dividends.
A dividend of 3$ per share (going in my pocket),
for example, should decrease historical
share prices by 3$.
This is NOT a multiplication and a split
could not implement it. By the way shouldn't the program insert
transactions into the default cash account
when importing transactions from a text file? Keep up the good work
George
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