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Question
Explain the following term/concept:
Capitalisation of Reserves
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Solution
(1) The process of issuing the bonus shares out of the company's profits or reserves is known as "Capitalisation of Profits or Reserves.
(2) It is a reward to shareholders, distributed in proportion to the number of shares each owns. The process has no impact on a corporation book value.
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Answer in one sentence.
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Correct information
