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Thanks mike for the previous question u answered on group and yes it was a tax loss from previous yrs .
Pls I v another question on eps.
Waffle had share capital of 7.5 million in 50c equity shares at 1 Oct 20×6. On 1 January 20×7 it made an issue of 4 million shares at full mktrice followed immediately by a 1 for 3 bonus . The financial statement at 30 Sept 2007 showed profit for the yr of 12 millionMy understanding to the question is that I divide 7.5 by 50c which is 15000 and multiply by the bonus fraction and the fraction of the yr .then add the shares at full mkt price to it and also multiply by the bonus fraction and the fraction of the yr but the working in bpp showed another method which is different to how it was explained in Kaplan.it was only the at the full mkt price of 4million that the fraction of yr was multiply with and added to the 15 million <7.5 divided by .50> and the bonus fraction was divided by the total. Pls if u can pls help me cause getting a bit confused . Thanks
From 1 October for 3 months there were 15 million shares in issue and they must be multiplied by the bonus fraction so that top line read:
1.10.X6 15,000,000 x 3/12 x 4/3 = 5,000,000
1. 1.X7 25,333,333 x 9/12 = 19,000,000= a total of 24,000,000 and eps of 50c
the difficulty arises with that issue at full market price and the temptation is to show a separate line:
1. 1.X7 19,000,000 x what period???? 1 day?
No, because the bonus was issued immediately after the issue at full price so it’s not possible to show a second line – 19,000,000 x 0/365 x 4/3 = zero
Is that better?
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