2019 Woolworth (WOW) Share Buy-Back

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Note

BGL does not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.

Overview


 

Details Amount per share
Dividend Component $24.15
Capital Component $4.79 
Excess of the Tax Value over the Buy-back Price. $2.71
Sale Consideration $7.50

(capital component + excess of the Tax Value over the buy-back price)

Buy Back Price $28.94

Instructions


The following components will need to be calculated for the fund's holding of WOW shares:

  • Capital proceeds received (Sale Consideration)
  • Excess of the Tax Value over the buy-back price
  • Dividend
  • Capital component of sale consideration

After this, a journal will need to be posted to process the share buy-back

Example


A fund with 1,000 WOW shares participated in the buy-back.

The components of the transaction are calculated as:

  • Capital Proceeds: $7.50 x 1,000 = $7,500.00
  • Excess of Tax Value: $2.71 x 1,000 = $2,710.00
  • Dividend: $24.15 x 1,000 = $24,150
  • Bank receipt of buyback price: $28.94 x 1,000 = $28,940

The following journal will need to be posted in Simple Fund 360:

Account Name Account Code Units Debit Credit
WOW Securities 77600/WOW.AX 1,000   $7,500
Investment Expense 37500/WOW.AX N/A $2,710  
Dividends Received 23900/WOW.AX N/A   $24,150
Bank 60400/Bank N/A $28,940  

 

Investment Expense

The Investment Expense account had the Tax Label set to Not Applicable - Permanent Difference. See Non-deductible tax expense for more details on changing this.

If you wish to create a new account to record this permanent difference, please refer to Add an Account

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Comments

5 comments
  • I found the sentence in the yellow box around' Investment Expense' a bit confusing.
    it says :
    The Investment Expense account had the Tax Label set to Not Applicable - Permanent Difference

    I think it would be clearer to say 'Make sure that the Investment Expense account Tax Label is set to Not Applicable - Permanent Difference'

    When I read your instruction, to me it said that it had previously been set to 'Not Applicable - Permanent Difference' and it now needed to be changed.
    It may just be me, but if I found it confusing possibly someone else will as well.

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  • The instructions are silent on the amount in my bank account from the bank feed, should I be deleting this?

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  • Trevor, the instructions just above the yellow box have the total amount of money received going into the 60400/... Bank account as a debit. Isn't that the amount from your bank feed?

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  • re you saying that I can take an amount that is showing up in the matching screen as its from a bank feed and add additional lines to entry and turn it into a journal?

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  • Hi Trevor. I should probably say that I am not an employee of BGL, just a fellow SF360 user. I'm not sure what is showing up in your matching screen, in fact I tend to edit my entries from the transaction screen. But yes, you will need to add extra journal lines to the transaction to account for all the parts. ie, the consideration (credit) , the dividend (credit) the investment expense (debit) and the amount received in the bank (debit). So there will be 4 lines in that transaction.
    Hope that helps.

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