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Hi
Referring to specimen paper F7 Dec 2014 q14
Please explain how we got
800,000 shares?- Topics: 0
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Basically, the market value of a share is $3
The share option lets you buy shares 2 million shares at $1.20 which is a total of $2.4million.
$2.4million divided by the market value of $3 means 800,000 shares could’ve been bought at the market price for the total value of the option.
Therefore the dilution element is the difference between 2 million and 800,000, i.e. 1,200,000 shares.
so retained earnings/shares is 1550/5000(original equity) + 1200 = 0.25
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