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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
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
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
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
Why B/f figures are 6/12 ? and instead right issue figures should have been instead.
I’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.