My Account Store Store

Warrants: AIG

Issue: How do I enter the distribution of warrants by AIG?

 

Cause: AIG issued warrants giving the holders of the warrants the right to buy AIG stock at a set price until a date in January 2021, ten years after the issue of the warrants. The warrants were issued as a taxable dividend.

Resolution:

This action will need two entries in the accounting software. The information below is based on the information available from AIG and the opening market price of the warrants and the distribution date...

 

The Dividend Entry

Go to Transactions > Dividend or Distribution or Accounting > Securities > Cash Dividend depending on the version of the software being used. Here is the information you need to complete the dividend entry.

Date: 1/20/2011

Select Transaction Type: Dividend or Distribution

Amount: 16.50 x .533933 x (# of AIG shares owned)

# of AIG warrants = .533933 x (# of AIG shares)

16.50 = opening price of AIG warrants on the distribution date, 1/20/2011

For example if you owned 100 shares of AIG your amount would be

16.50 x .533933 x 100 = 880.98945. Round up to 880.99

This amount includes the cash received in-lieu fractional warrants of AIG.

Ex-Dividend date: 1/20/2011

Type: Dividend

Select Security: AIG (AIG)

Save the transaction and the dividend has been entered.

 

The Buy Entry

Go to Transactions > Buy or Accounting > Securities > Buy depending on the version of the software being used.

Here is the information you need to complete the buy.

Date: 1/19/2011

Select Security: AIG warrants (AIG.WT)

Number of Shares Bought: The whole number part of .533933 x (# of DSX shares owned). Check this with your broker statement.

Net Total of Purchase: Subtract your cash-in-lieu received from the Amount calculated in the Dividend entry above. Use the result as the total purchase price. Find the cash-in-lieu amount on your broker statement. Using the example above for 100 shares of AIG owned and cash-in-lieu received of 6.40, the purchase price would be 880.99 – 6.40 = 874.59.

Save the buy transaction and you have completed the distribution of the AIG warrants.

 

Note: The cash-in-lieu seldom equals the (fractional shares sold) x (the opening price).



 
  
About    Press    Management    Privacy Policy    Terms of Service    Contact

copyright © 1989 - ICLUBcentral Inc. or its affiliates