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- This topic has 2 replies, 3 voices, and was last updated 3 years ago by P2-D2.
- AuthorPosts
- June 2, 2020 at 8:20 pm #572614
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
46,166,667this 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 = 46,166,667I 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?
June 3, 2020 at 2:08 pm #572670Its about the bonus issue – you did have 5 shares and now you have 7
look at bonus fractions and terp in your text bookJune 4, 2020 at 10:52 am #572847Correct, 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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