Bonus issues recapitalize reserves into share capital without new resources

Steps:

• Identify bonus issue as transferring retained earnings or reserves to share capital at nominal value.
• Note no cash inflow or outflow occurs; shares issued to existing shareholders from equity.
• Record increase in share capital by bonus amount, offset by decrease in reserves.
• Confirm total assets unchanged, as no new assets acquired; equity reclassified but balanced.

Why D is correct:

• Per IAS 1, bonus issues reclassify within equity (share capital up, reserves down), leaving total assets intact since no transaction affects resources.

Why the others are wrong:

• A: Share capital increases via capitalization, does not decrease.
• B: Share capital increases; total assets remain unchanged, not decreased.
• C: Total assets do not increase, as no funds received or assets added.

Final answer: D