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  • 1.  Reissuance of treasury shares through a stock dividend

    Posted 02-01-2024 05:38 AM

    Hi everyone, 

    I oversee the Financial Department of a Financial Investment Firm. While I have dealt with numerous theoretical aspects, the concept of a stock dividend is new to me. I am currently facing a dilemma concerning the reissuance of treasury shares through a stock dividend.

    I am seeking guidance on the proper journal entry for this scenario. The ultimate goal is to reset the treasury shares account to zero. I appreciate your insights and assistance on this matter.

    Thank you.

    Laila 



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    Laila Perillo CMA
    Accountant
    Andorra La Vella
    Andorra
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  • 2.  RE: Reissuance of treasury shares through a stock dividend

    Posted 02-06-2024 09:33 AM

    Laila,

    As you are based in Andorra, there may be some differences for IFRS vs GAAP, but on the GAAP side it is possible to issue the shares as a dividend at cost, booking gains to Addition Paid-In Capital and any loss to Retained Earnings.  In the U.S. that can be hindered by local jurisdictional law (as memory serves), but assuming all is copacetic with the local laws, the zeroing out of the TS account is done by making sure all shares are distributed.  As it is a equity transaction only, there is no gain/loss that is shown on the income statement.



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    Justin Baldwin-Bonney CMA
    Director/Manager
    Spokane WA
    United States
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    Original Message


  • 3.  RE: Reissuance of treasury shares through a stock dividend

    Posted 02-07-2024 05:10 AM

    Hi Justin,

    Thank you for your insights. I really appreciate it.

    It's reassuring to learn that reissuing shares as a stock dividend is possible. Given that this transaction requires authorization from a competent authority (such as the SEC in the US), I am considering using IFRIC 17 Distributions of Non-cash Assets to Owners and IAS 32 Financial Instruments: Presentation. However, I am having difficulty in finding an illustration of this transaction under IFRS.  



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    Laila Perillo CMA
    Accountant
    Andorra La Vella
    Andorra
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    Original Message