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1)-
part(a)the calculation made under S.O.F.P include the changes in proposal such as under
Proposal 2
Additional interest is payable and the new investment will generate an additional
return of 15% which is $3 million in income. The net impact is income of $1.72 million, which is added to retained earnings and to current assets as it either represents cash or a receivable.which is not done like that in bbs stores(june 09) and their working under the S.O.F.P were very neat , it only made such adjustments in earning per share part and not S.O.F.P.
shall i go with that approach to this question as it was easy.2)-
share calculation always confuses me , please give me an idea of it.
when we are repurchasing the shares we divide the proceeds such as here in this context 20m by share price of 3.20 share price why that.
and when we are calculating no of shares we calculate it 48m divide by 40 per share which is 120,000 shares , i am confusing this amount paid per share with the share price just because of bbs store(previous question).1. It doesn’t matter how you show your workings – whichever you find the easiest.
2. If they are paying $3.20 per share, and they are paying a total of $20M, then they are buying 30M/3.20 shares.
The 48M is the total nominal value of the shares. Since the nominal value is 0.40 per share, then it means the total number of shares in issue is 48M/0.40
thank so much sir you made it very clear , and sorry about yesterday question i hope you don’t mind.
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