Example: Bonus issues On 1 January 20X1, ABC Ltd has 100,000 ordinary shares in issue and 50,000 10% preference shares. On 1 October 20X1, ABC declared 1 bonus share for every 2 existing shares held. Profit after tax for 20X0 and 20X1 were $45,000 and $55,000 respectively. Determine basic EPS for 20X0 and 20X1. 20X1 20X0 Profits attributable to ordinary shareholders 500,000 400,000 No. of ordinary shares at year end Basic EPS (original calculated) 2,000,000 1,000,000 $0.25 $0.4 EPS for 20X0=40,000 100,000 = $0.4 EPS for 20X1 = 50,000 / 150,000 = $0.33 EPS for 20X0 (restated) = $0.4 ÷ BAF 3/2 = $0.27 Bonus adjustment factor (BAF) = 1 + bonus issue ratio = 1 + 1 = 3/2

Example: Bonus issues On 1 January 20X1, ABC Ltd has 100,000 ordinary shares in issue and 50,000 10% preference shares. On 1 October 20X1, ABC declared 1 bonus share for every 2 existing shares held. Profit after tax for 20X0 and 20X1 were $45,000 and $55,000 respectively. Determine basic EPS for 20X0 and 20X1. 20X1 20X0 Profits attributable to ordinary shareholders 500,000 400,000 No. of ordinary shares at year end Basic EPS (original calculated) 2,000,000 1,000,000 $0.25 $0.4 EPS for 20X0=40,000 100,000 = $0.4 EPS for 20X1 = 50,000 / 150,000 = $0.33 EPS for 20X0 (restated) = $0.4 ÷ BAF 3/2 = $0.27 Bonus adjustment factor (BAF) = 1 + bonus issue ratio = 1 + 1 = 3/2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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