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Forums › CIMA Forums › When not to use bonus fraction to calculate eps
Hi ,
I was solving a question from the Kaplan F2 text on pg 135. The relevant part of the question was as follows-
On 1st January 20×9 a listed entity had 3000000 ordinary shares in issue. On 1st May 20×9 it made a bonus issue of 1 for 3. On 1st Sep 20×9 it issued 2000000 shares for 3.2 each. Profit before tax for the yr was 1040000 and tax expense was 270000.
In my solution I have used the bonus fraction of 3/7 to calculate weighted avg no. of shares. But the solution at the back has taken all of the 1000000 bonus shares issued to calculate it, and hence my answer is different from the solution.
My question is – Why have they not used the bonus fraction?
Just realised it’s the same answer using bonus fraction of 4/3 *3000000= 4000000. My bad. Sorry about that!
Thanks