Vodafone and Verizon transaction - 2014

US holders of Vodafone can hold ordinary shares or ADRs. This write up is for holders of ADR shares, 1ADR= 10 ordinary shares. Most clubs will hold the ADR shares.

For US shareholders of Vodafone this is a taxable dividend distributed by Vodafone to its shareholders. The total value of the dividend is the sum of the cash received and the fair market value of the Verizon shares received. Information on this transaction was found on the https://www.sec.gov/edgar/searchedgar/companysearch.html web site.

We STRONGLY suggest to read the entire set of instructions before starting, as this transaction requires several smaller entries in our club accounting system

Part One: 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: Use the date cash actually deposited to your account

Select Transaction Type : Dividend or Distribution

Amount: [17.338 x (# of VOD shares owned) ]

This is 4.928 cash and 12.41 in Verizon shares

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

17.338 x 100 = 1733.80.

This amount does not include the cash received in-lieu of fractional shares of Verizon

Ex-Dividend date: 2/24/2014.

Type : Dividend

Select Security: Vodafone (VOD)

Account: Suspense

Save the transaction and the dividend has been entered.

Part Two: Cash Transfer Transaction

Go to Transactions > Transfer Cash or Accounting > Cash Accounts > Transfer, depending on the version of the Club Accounting being used.

Transfer the actual cash received from the Suspense account to the Broker/Bank account that actually received the cash payment. The amount remaining in the Suspense account is the value of the Verizon shares received. You will be purchasing the Verizon shares for this amount. (This assumes the Suspense account balance was zero when you made the dividend entry.)

Part Three: 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: Use the date the shares appear in your account.

Select Security: Verizon (VZ)

Number of Shares Bought : .263 x (# of VOD shares owned). For example if you owned 100 shares of VOD you would enter .263 x 100 = 26.3 shares. (Include fractional shares.)

Net Total of Purchase: This should be the total amount in the Suspense account after the cash transfer transaction is completed. The amount should be the total dividend amount minus the actual cash received, not including cash-in-lieu of fractional shares.

Use the Suspense account as the source of the funds.

If your broker charged a reorganization fee for this transaction, add the fee to the purchase price.

You will then need to transfer the amount of the fee from the broker account to the Suspense account to account for the decreased broker balance and keep the Suspense account to a zero balance.

Part Four: The VZ Sell Transaction

If you received cash in-lieu of fractional VZ shares, enter a sell transaction with the number of shares sold the fractional part of the VZ shares received in this transaction. In the buy transaction above this would be .3 VZ shares. The total proceeds should equal the cash-in-lieu received. Date the sell transaction one day after the VZ buy transaction, or the day the cash-in-lieu appears in your account.

Part Five: The VOD Reverse Split

Use the stock Split entry screen for this transaction.

Date: 2/24/2014

Company: Vodafone (VOD)

Split Ratio: 6 for 11

Cash received: Use the cash-in-lieu of VOD shares from your broker statement.