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hii chris i wanted to know about if the answer given of diluted eps is wrong in acca pre mock test.question is- ‘HERALD CO. HAD 11 MILLION SHARES IN ISSUE ON 1 JULY 2003.NO SHARES WERE ISSUED DURING YEAR ENDED 30 JUNE 2004.THERE WERE 250000 OUTSTANDING SHARE OPTIONS TO BE BOUGHT AT $2.75 PER SHARE ON THAT DATE.THE NOMINAL VALUE PER SHARE IS $1,WHEREAS FAIR VALUE IS 3.10 AT 30 JUNE 2004.THE PROFIT AFTER TAX FOR THE YEAR WAS $5.2M.’
in this they divided numerator by 11221774 diluted shares to reach at diluted eps of .46.shouldn’t we subtract 221774 shares(250000*2.75/3.10) from 250000 to get 28226 shares and then diluted shares will be 11m + 28226.
kindly help
Hi,
Yes, when dealing with the share option and diluted EPS then we look at the ‘free’ number of share to be issued as part of the share options, so it would appear that you are correct in your calculations.
Thanks
sir but according to me and you the answer would be 0.47 but they have stated it to be 0.46. will be get the marks under such situations??
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