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Waffle had share capital of $7.5 million in 50c equity shares at 1st October 20X6. On 1st January 20X7 it made an issue of 4 million share 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 EPS for the year?The answer is:
Shares (‘000)
b/f (7,500/0.5) 15,000
Full market price issue (4000×9/12) 3,000
Bonus issue (18,000/3) 6,000
Total 24,000
EPS= $12,000/24,000= $0.5My question is how is the bonus shares calculated, i thought it should have been 19000/4, and why is there no adjustment of bonus fraction from the start to until the bonus issue?
Thanks in advance.first you need to understand bonus shares are always assumed to be there from the start of the period till the end i.e 12 months.
second, the bonus issue came after full issue means they were given bonus after the addition of 4 million shares which stayed for 9 months from issuing. So the computation is fine i.e 1/3*18,000,000.
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