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Need help on online practice question number 3 on eps

PFPeer Far6y ago
this is the question: Eyot plc had an issued share capital at 31 December, 2015 of $52 million equity shares of $1 each. On 1 March, 2015 Eyot plc had made a 2 for 5 bonus issue followed on 31 July by an issue at full market price of 10 million shares at $1.75 each What is the weighted average number of equity shares in issue for Eyot plc in the year to 31 December, 2015? 77,800,000 42,738,095 76,966,667 46,166,667 this is the answer: Incorrect If there are 52 million shares at the end of the year after an issue of 10 million shares at full price on 31 July, then on 30 July there must have been only 42 million shares in issue If there are 42 million shares in issue after a 2 for 5 bonus issue on 1 March, then on 28 February there must have been only 30 million shares in issue 1 January-1 March = 2/12, 1 March -31 July = 5/12, 1 August-31 December = 5/12 30,000,000 x 2/12 x 7/5 = 7,000,000 42,000,000 x 5/12 17,500,000 52,000,000 x 5/12 = 21,666,667 wanes = 46,166,667 I think i have a problem with this: 30,000,000 x 2/12 x 7/5 = 7,000,000 why is it multiplied by 7/5?
Aanniebabe6y ago#1
Its about the bonus issue - you did have 5 shares and now you have 7 look at bonus fractions and terp in your text book
PP2-D2Tutor6y ago#2
Correct, the 7/5 is the bonus fraction, which is the number of shares after the issue divided by the number of shares before the issue. Thanks
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