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- October 29, 2021 at 1:37 am #639349
Hi Sir,
Hope you are well!
On 31 December 20X1, the issued share capital consisted of 4,000,000
ordinary shares of 25¢ each. On 1 July 20X2 the entity made a rights
issue in the proportion of 1 for 4 at 50¢ per share and the shares were
quoted immediately before the issue at $1. Its trading results for the last
two years were as follows:
Year ended 31 December
20X2 20X1
$ $
Profit after tax 425,000 320,000
Show the calculation of basic EPS to be presented in the financial
statements for the year ended 31 December 20X2 (including
comparative).I was calculating the weighted average no. of shares .. however I am not understanding the below calculation performed:
Step 3 – Weighted average number of shares
No.Bonus
fraction TimeWeighted
average
1 January b/f 4,000,000 1/0.9 6/12 2,222,222
1 for 4 rights 1,000,000
––––––––
1 July b/f 5,000,000 6/12 2,500,000
–––––––– ––––––––
4,722,222
––––––––Why B/f figures are 6/12 ? and instead right issue figures should have been instead.
October 30, 2021 at 9:55 am #639461I’m well, thank you. The opening 4,000,000 were in issue for 6 months and so we need to multiply by the 6/12, with the 5,000,000 being in issue for the following 6 months so also multiplied by the 6/12. This is helping with the weighting calculation.
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