Processing the Evolution Mining takeover of Phoenix Gold

Legacy KB ID: 5352

Question

How do I process the takeover of Phoenix Gold shares by Evolution Mining in Reckon Accounts Personal range?

Answer

Investors should refer to official documentation sent them by Phoenix Gold and/or Evolution Mining.  Any questions should be referred to your Accountant or to Investor Relations at Evolution Mining.

Internet resources are available at:

Main offer:

https://www.evolutionmining.com.au/wp-content/uploads/2015/09/150911-Phoenix-Bidder_s-Statement.pdf

See Attachement 3 for Tax considerations and calculation of Cost Base.

 

And the Final offer (26/11/15) at:

https://www.phoenixgold.com.au/assets/public/files/EVN%20Takeover%20Price%20Declared%20Final.pdf

 

 

The following should be treated as a guide only and your particular circumstances may be materially different to the circumstances of the example used here.  Please refer to your Accountant and/or Investor Relations at Evolution Mining for further guidance.

 

This guide will offer three alternatives and is based on the following assumptions:

Purchased 71,235 Phoenix Gold shares at 0.15 on 31/3/2014 for 10,685.25

Evolution Mining offer accepted on 15/12/15 with share price closing that day at 1.395

The offer of:

  1. 0.06 Evolution Mining shares for 1 Phoenix gold share

  2. Total Cash Entitlement of $0.0675 per Phoenix gold share (“Ineligible Proceeds”)

Cash Entitlement is a Capital Gains Taxable (CGT) amount.

 

Alternative 1 uses the easiest functions in Reckon Accounts Personal range but does not properly reflect the CGT effects of the Cash Entitlement.

Alternative 2 ignores the impact on the CGT Calculator.

Alternative 3 focusses on maintaining integrity of the CGT Calculator.  This process will compromise some investment reports for past dates.

 

 

Common elements

Step 1 – Calculate Evolution Mining Share Entitlement

1 Phoenix = 0.06 Evolution = 0.06 x 71,235 = 4,274 whole shares (4,274.1 exact)

 

Step 2 – Calculate Evolution Mining Cash Entitlement

0.0675 per Phoenix share = 0.0675 x 71,235 = 4,808.36.

 

Step 3 – Calculate Cost Base of converted Phoenix shares

 

= 10,685.25 x [(4,274 x 1.3950 / (4,808.36 + 5962.23)]

= 10,685.25 x 0.553565774948

= 5,914.98870

Per share:  5914.98870/4274 = 1.38395

 

Step 4 – Create a TakeOver Cash Account in your Investing Account

  1. Create a Cash Account in your Personal Cash Flow

  2. Right-click the created account and select Edit

  3. Click the dropdown arrow in Account Location and select Investing:Investment to transfer the account to Investing section.

 

 

Alternative 1

CGT status transferred from Phoenix Gold but the Cash component is not treated as CGT and is not included in the CGT Calculator (CGT Calculator for the next 12 months will not be correct).

 

Step 5 – Accept a Return of Capital on Phoenix Gold shares equal to the Cash Entitlement – 4,808.36 – on Acceptance date (15/12/15) and accept it to the TakeOver Cash Account.

 

Step 6 – Process a Corporate Acquisition of Phoenix Gold shares by Evolution Mining on the Acceptance date (15/12/15) with the share price at the calculated cost base price of 1.38395 (5,915.14).

 

Step 7 – Sell the fractional Evolution Mining share (0.1) at the calculated cost base on Acceptance Date (15/12/15) and accept funds (0.14) to the TakeOver Cash Account.

 

Step 8 – Transfer Cash Entitlement (4,808.36) from the TakeOver Cash Account to your normal Bank Account.

 

Step 9 – Clear out any amounts in the TakeOver Cash Account (4808.36 – 4,808.36 + 0.14 = 0.14) to either an Investment Cost or Investment Benefit account. 

 

 

Alternative 2

CGT status not transferred from Phoenix Gold and impact on CGT Calculator not considered (CGT Calculator for the next 12 months will not be correct).

 

Step 5 – Sell Phoenix Gold shares at original Cost Base (10,685.25) on Acceptance date (15/12/15) and accept funds to the TakeOver Cash Account

 

Step 6 – Buy Evolution Shares at calculated cost base on Phoenix Gold Acceptance date (15/12/15) with funds from the TakeOver Cash Account (4274 x 1.38395 = 5915.0023)

 

Step 7 – Transfer Cash Entitlement (4,808.36) from the TakeOver Cash Account to your normal Bank Account.

 

Step 8 – Clear out any amounts in the TakeOver Cash Account (10,685.25 – 5,915.00 – 4,808.36 = -38.11) to either an Investment Cost or Investment Benefit account. 

 

 

Alternative 3

CGT status for new Evolution Mining shares will be transferred from Phoenix Gold.

CGT Calculator will correctly reflect the impact of the takeover.

(Some Investment Reports for past dates may now be incorrect)

 

Step 5 – Accept a Return of Capital on Phoenix Gold shares equal to the Cash Entitlement – 4,808.36 – on Acquisition date (31/3/14) and accept it to the TakeOver Cash Account.

 

Step 6 – Sell Phoenix Gold shares at adjusted Cost Base of 5,876.89 (10,685.25 – 4,808.36) on Acceptance date (15/12/15) and accept funds to the TakeOver Cash Account

 

Step 7 – Buy Evolution Shares at calculated cost base on Phoenix Gold Acceptance date (15/12/15) with funds from the TakeOver Cash Account (4274 x 1.38395 = 5915.0023)

 

Step 8 – Transfer Cash Entitlement (4,808.36) from the TakeOver Cash Account to your normal Bank Account.

 

Step 9 – Clear out any amounts in the TakeOver Cash Account (4808.36 + 5876.89 – 5,915.00 – 4,808.36 = -38.11) to either an Investment Cost or Investment Benefit account. 

 

 

Need more help?

Ask the Reckon Community at: https://community.reckon.com/reckon.

 


How did we do?

How can I get my data from other software into Reckon Accounts?

How do I apply a credit to a refund cheque?

Related Articles

msvbvm60.dll error when processing end of day
Processing the South32 Demerger from BHP Billiton Ltd.
Processing the Westfield Restructure in Reckon Accounts Personal Range
Powered by HelpDocs (opens in a new tab)

Powered by HelpDocs (opens in a new tab)