Hello. I want to ask you a question about example 5 of chapter 21.
Question : Edgars had in issue throughout the year ended 31 December, 2009, 3,370,000 $1 equity shares, an earning for the year, after tax at 25%, were $10,000,000. Of this amount, $900,000 was from discontinued operation.
When calculating basic EPS, I calculated the earning first. which is,
10,000,000-900,000=9,100,000
I deducted 900,000 because it occurred from discontinued operations.
In the lecture note, it says that EPS is 10,000,000/3,370,000=19.64
I thought when you calculate Earning, i needed to deduct the results of discontinued operations and preference dividend.
Could you explain? Thank you !!
Ask the Tutor ACCA FR
lecture note chapter 21, example 5.
Earnings for the year just ended include the earnings from discontinued operations.
When looking ahead for the purposes of determining dilutive or anti-dilutive, we ignore the earnings from discontinued operations.
Having determined which conversions are anti-dilutive, we can now go ahead and calculate the figure to be shown this year as diluted earnings per share, but that calculation INCLUDES the earnings from the discontinued operations.
In summary, we exclude those earnings ONLY for the purposes of determining dilutive / anti-dilutive
Ok?
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