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Bonus fraction

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Bonus fraction

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by alawi sayed.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 6, 2021 at 9:10 pm #630626
    alawi sayed
    Participant
    • Topics: 152
    • Replies: 166
    • ☆☆☆

    Hello Sir,

    For calculating EPS as in your lecture we need the fraction for rights issue

    why they use the fraction here for the bonus shares and also I do not know how they got the fraction of 4/3

    Thanks,

    Q
    Waffle Co had share capital of $7.5 million in 50c equity shares at 1 October 20X6. On 1 January 20X7 it
    made an issue of 4 million shares at full market price immediately followed by a 1 for 3 bonus issue.
    The financial statements at 30 September 20X7 showed profit for the year of $12 million.
    What was the earnings per share for the year? State your answer to two decimal places.

    Answer

    Number of shares
    Time
    apportioned
    Bonus
    fraction
    Weighted
    average

    1/10/X6 15,000,000 3/12 4/3 5,000,000
    1/1/X7 4,000,000
    19,000,000
    Bonus issue (18,000 / 3) 6,333,333
    25,333,333 9/12 19,000,000
    24,000,000
    EPS = 12 / 24 = $0.50

    August 8, 2021 at 10:25 am #630752
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6443
    • ☆☆☆☆☆

    Hi,

    the bonus fraction is calculated as the number of shares after the issue divided by the number of shares in issue before. As it was a 1-for-3 then there were three in issue before and 4 after (i.e. 3 old plus the one new one issued).

    Thanks

    August 8, 2021 at 6:55 pm #630848
    alawi sayed
    Participant
    • Topics: 152
    • Replies: 166
    • ☆☆☆

    Thanks

  • Author
    Posts
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