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EPS, question from opentuition practice questions

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › EPS, question from opentuition practice questions

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • December 1, 2015 at 1:49 am #286592
    Victoria
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Anda has correctly calculated EPS for the current year ended 30 September but is confused about how to restate last year’s disclosed EPS.
    On 1 January 2014 there had been a 1 for 7 bonus issue and on 1 June 2014 there had been a 3 for 2 rights issue with an exercise price of $2. Mid-market price on 31 May 2014 was $7 and Anda’s corporate rate of income tax is 25%.

    By what fraction should last year’s disclosed EPS be multiplied?

    PS: I dont understand this question.

    December 1, 2015 at 8:47 am #286643
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You need to work through the earnings per share chapter in the course notes!

    Last year’s earnings per share need to be adjusted by multiplying the stated eps by the reciprocals of the bonus fraction and the rights fraction

    So, multiply by 7/8 and by 4/7 ie multiply by 1/2

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