Hello I am here again with a practical question about EPS that drove a huge debate in the office today 😀
A company is issuing its interim financial statement in 30/6/2015. Beginning number of ordinary shares is 162,500. Issued 37,500 ordinary shares (for cash) on 30/4/2015. What is the weighted average number of ordinary shares as at 30/6/2015?
A team says that we need to divide the 2 months (time of capital in business) over six months to know the actual share of the capital increase in the profit of the period. So: 37,500*(2/6) = 12,500 While the other team thinks that the issued shares should be multiplied by (2/12).
Kindly discuss the acceptability of this accounting treatments