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Inkadove
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Joined: 16 Jan 2012
Location: United States
Online Status: Offline
Posts: 1

Posted: 16 Jan 2012 at 17:12 \| IP Logged

I am in charge of processing corporate actions. Recently
I have been seeing rights offering by some of our
holdings.

Basically we hold stock, and, because of our ownership,
we have been issued rights to buy additional shares of
stock at a certain price. How do I do the accounting for
these rights? Does the treatment differ depending on the
circumstances? for example:

If the rights are tradeable and have a market value on a
public exchange?
If the rights are in the money vs out of the money?
How far out the expiration date?

I am trying to figure out the proper journal entries. Any
sources cited would be much appreciated as well.

FYI currently we process these not based on guidance, but
based on "what the last guy did". If the rights are
traded and have a market value we debit and credit @
market value:

(Dr) Rights XX
(Cr)Dividend income XX

If the rights are not traded and have no market value, we
make no entries unless the rights are exercised in which
case we treat it like a purcase.

(Dr) Rights XX
(Cr)Cash XX

rebeccaS
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Joined: 20 Feb 2012
Location: United States
Online Status: Offline
Posts: 1

Posted: 20 Feb 2012 at 00:25 \| IP Logged

Talk about rights in here, almost all of us are entitled of property rights but just recently in the summer of 2011, a Texas male rose to infamy with the adverse possession of a $330,000 estate in Flower Mound, Texas. The courts, however, decided that Kenneth Robinson's adverse possession is not legal, and he has been evicted. Resource for this article: Courts are kicking adverse possession practitioners out of homes.

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