The authorized share capital of the Company consists of 650,000,000 shares of RO 0.100 each. The details of the equity before the right offer and the other details are as below: RO Share capital 29.621.368 Legal reserve 6.665.959 Retained earnings 2.052.872 Capital Reserve 629.289 General Reserve 125.865 Revaluation Reserve 152.356 70% of the shareholders subscribed to this offer. Post right issue in pursuant with the provisions of Oman commercial law the company board also decided to come up with a bonus issue for its equity shareholders. The boms share of the company can be issued when the articles of the association is authorized to issue the bonus shares. It is essential to know that if the articles of association do not permit to issue bonus shares, the company should pass a special resolution at the general meeting of the company. As part of the procedure, the company has checked the articles of association which allowed issue of bonus shares and the company confirmed enough authorized capital is available. The bonus issue took place in the month of May 2020. It was accorded that a sum of RO 125.800 can be utilized for bomus out of general reserve and set free for distribution amongst the equity shareholders. Each shareholder will be eligible for share for every 50 shares held. You are required: a. In your own words highlight upon the various situations presented in the case and how it will affect the company? (3 marks - Min 150 words) b. Pass necessary journal entries for the rights and bonus taking place in the given scenario. Ignore the entry for share issue expenses. (4 marks) c. Prepare necessary abstract to represent such transactions in Statement of Financial Position. (3 marks) The authorized share capital of the Company consists of 650,000,000 shares of RO 0.100 each. The details of the equity before the right offer and the other details are as below: RO Share capital 29.621.368 Legal reserve 6.665.959 Retained earnings 2.052.872 Capital Reserve 629.289 General Reserve 125.865 Revaluation Reserve 152.356 70% of the shareholders subscribed to this offer. Post right issue in pursuant with the provisions of Oman commercial law the company board also decided to come up with a bonus issue for its equity shareholders. The boms share of the company can be issued when the articles of the association is authorized to issue the bonus shares. It is essential to know that if the articles of association do not permit to issue bonus shares, the company should pass a special resolution at the general meeting of the company. As part of the procedure, the company has checked the articles of association which allowed issue of bonus shares and the company confirmed enough authorized capital is available. The bonus issue took place in the month of May 2020. It was accorded that a sum of RO 125.800 can be utilized for bomus out of general reserve and set free for distribution amongst the equity shareholders. Each shareholder will be eligible for share for every 50 shares held. You are required: a. In your own words highlight upon the various situations presented in the case and how it will affect the company? (3 marks - Min 150 words) b. Pass necessary journal entries for the rights and bonus taking place in the given scenario. Ignore the entry for share issue expenses. (4 marks) c. Prepare necessary abstract to represent such transactions in Statement of Financial Position
