Dividends - non-participating shares

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blue-sky

Posted 24/09/2008 10:32:45 PM

Junior Member

Group: Forum Members
Last Login: 18/10/2008 3:12:58 PM
Posts: 8, Visits: 21

How do we record the dividends where there are new shares purchased between the record date and payment of the dividend.

The specific case is where BKN shares were purchased under an rights issue, but they do not participate in the dividend. The purchase date (4 Sept) is the same as the dividend payment date, and the system wants to create entries against both classes of shares.

Post #4049

MySF2

Posted 28/09/2008 8:33:52 PM

MySF Administrator

Group: Administrators
Last Login: Today @ 8:08:32 PM
Posts: 293, Visits: 390

Hi,

At this point there is no way of excluding an asset that was owned at the time of the income from being tagged as at least partially responsible from earning the income tagged to that stock code.

The only way that this could be prevented would be to record the dividend before the rights issue.

However, there is little real impact from letting the software record the income against all parcels, including those gained from the rights issue. The actual income account and amount does not change. The only impact will be in yield analysis, but there is no option for comparing yields on two parcels of the same asset so this is a moot point. So the best option is to just record the income even though it will be split to all parcels of the stock.

Other readers please note that the above is not correct for distributions that include a tax deferred component as the effects of that do need to be isolated to parcels that earned the income and should not affect parcels not involved in the event.

Regards,

MySF

Post #4054

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