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Dear Tutor,
For question 2, how did we get the earning per shares? I looked at the answers for the theorectical ex-right value, where there is 100m shares @$2, and 25million shares at $1.20. How did the solution gets the 100m and 25m shares in the first place? the question stated that on 1 July 2012, Atlas made and recorded a fully subscribed rights issue of 1 for 4 at $1.20 each. Do I always take it as 1 shares extra for every 4 existing, hence total is 5 shares? Presently, there are 100m shares, so my guess is to divide by 4, hence you get 25m shares for 1, and since there are a total of 5, you get 125m shares?
Second question, under the weightage average number of shares, for 1 April 2012 to 30 June 2012, how did you get 80 million * $2/$1.84*3/12? Where did the 80million came?
On 1 July 2012 to 32 March 2013, you have 100million *9/12, where did the 100million came from?“Made and fully recorded …..” so the figures in the list of balances are AFTER recording the rights issue. If the issue was “1 for 4” then for every four already held, the shareholder had the right to acquire one more.
So BEFORE the rights issue, there must have been $40,000 worth of shares and AFTER the rights issue there would be $50,000 worth of shares
The shares have a nominal face value of 50 cents each so BEFORE the rights issue here must have been 80,000 shares in issue and AFTER the rights issue there must have been 100,000
The calculation of the rights fraction should now be straight forward for you to work out for yourself! If you still struggle, post again, but use the free course notes to help you through that rights fraction calculation process
OK?
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