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If bonus shares are issued out of pre- acquisition profit, it will have

When a subsidiary company issues bonus shares out of pre-acquisition profits, its pre-acquisition reserves decrease and its paid-up share capital increases by an identical…

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If bonus shares are issued out of pre- acquisition profit, it will have

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When a subsidiary company issues bonus shares out of pre-acquisition profits, its pre-acquisition reserves decrease and its paid-up share capital increases by an identical amount. Because the holding company's share in the pre-acquisition net assets remains unchanged, the cost of control (Goodwill or Capital Reserve) is unaffected, resulting in 'No effect on the Consolidated Balance Sheet'.

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