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On 1 October 20X4, Hoy Co had $2·5 million of equity share capital (shares of 50 cents each) in issue.
No new shares were issued during the year ended 30 September 20X5, but on that date there were outstanding share options which had a dilutive effect equivalent to issuing 1·2 million shares for no consideration.
Hoy’s profit after tax for the year ended 30 September 20X5 was $1,550,000.
In accordance with IAS 33 Earnings Per Share, what is Hoy’s diluted earnings per share for the year ended 30 September 20X5?The examiner is multiplying 2.5m with 2 then adding 1.2 m for calculating the shares.The answer is 1550000/6200000=0.25
Why is he multiplying 2.5m with 2 ?
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