Exam 19: Earnings Per Share

In accordance with IAS 33,which of the following is required to be presented on the face of the statement of comprehensive income? I: Basic and diluted EPS from continuing operations attributable to ordinary shareholders of the parent entity II: Basic and diluted EPS for discontinued operations III: Basic and diluted loss per share

What is the effect of an issue with bonus element on the weighted-average number of ordinary shares? Explain the adjustment process and the rationale for this requirement in IAS 33.

Beuno Plc has 3 000 000 ordinary shares on issue at the beginning of the year,1 July 2014.These shares were issued at £2.00 each and at the end of the period have a current market value of £4.50.On 1 August 2014,Beuno Plc bought back 600 000 ordinary shares originally issued at £2.50 for £3.00 each.On 1 November 2014,500 000 shares were issued fully paid up at the current market value of these shares.On 1 March 2015,200 000 partly paid-up ordinary shares were issued at an issue price of £3.50.These shares were partly paid to £2.00.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price.What is the weighted-average number of shares calculated in accordance with IAS 33?

Flagstaff Plc has the following potentially diluting securities outstanding for the year ended 30 June 2014: £200 000,6.5%,convertible note (10 000 ordinary shares) £200 000,6.5%,convertible preference shares (10 000 ordinary shares) 10 000 employee options convertible to one ordinary share (exercise price £2.50; average market price during the year was £2.70) 50 000 executive options convertible to one ordinary share (exercise price £4.50) Basic EPS for the year ended 30 June 2014 is calculated at £1.20 per share. Rank the above securities in the order of most dilutive to least dilutive potential ordinary shares that is in accordance with IAS 33.

Under which of the following situations would the potential ordinary shares be included in the calculation of diluted earnings per share?

A bonus issue will have an impact on:

Discuss what is referred to in IAS 33 Earnings per Share as antidilutive security and illustrate a potential ordinary share that is considered to be antidilutive.

For the purpose of calculating earnings per share,the denominator is:

Craven Plc has 10 000 000 ordinary shares on issue at the beginning of the year,1 July 2013.These shares were issued at $0.50 each and have a current market value of €3.00.On 1 November 2013,Craven Plc bought back 1 000 000 ordinary shares originally issued at €0.50 for €1.90 each.On 1 February 2014,1 500 000 shares were issued fully paid up at the current market value of these shares.Also during the period,500 000 partly paid-up ordinary shares were issued.They were issued on 1 April 2014 at an issue price of €2.90.These shares were partly paid to €1.80.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price. Craven Plc has 3 000 000,€1.00 preference shares that provide cumulative dividends at a rate of 8%. For the year ended 30 June 2014,the net income after tax was €20 000 000. What are the basic earnings per share for Craven Ltd for the year ended 30 June 2014?

Which of the following statements is true in accordance with IAS 33?

BI Plc has 7 000 000 ordinary shares on issue at the beginning of the year,1 July 2014.These shares were issued at €4.50 each and have a current market value of €8.00.On 1 September 2014,BI Plc bought back 500 000 ordinary shares originally issued at €4.50 for €6.50 each.On 1 December 2014,1 000 000 shares were issued fully paid up at the current market value of these shares.Also during the period,800 000 partly paid-up ordinary shares were issued.They were issued on 1 February 2015 at an issue price of €7.20.These shares were partly paid to €4.50.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price. BI Plc has 1 000 000,€1.00 preference shares that provide non-cumulative dividends at a rate of 10%.The dividends were not paid this period. For the year ended 30 June 2014,the net loss after tax was €1 000 000. What are the basic earnings per share for BI Plc for the year ended 30 June 2015?

The earnings per share figure is likely to be of interest to shareholders and potential investors because:

IAS 33 Earnings per Share does not require an entity to restate diluted earnings per share of any prior period presented in a case of a stock split.

Which of the following entities is not in the scope of IAS 33 Earnings per Share?

Cavendish Plc has 2 000 000 ordinary shares on issue at the beginning of the year,1 July 2014.These shares were issued at €2.00 each and at the end of the period have a current market value of €4.50.On 1 August 2014,Cavendish Plc bought back 300 000 ordinary shares originally issued at €2.50 for €3.00 each.On 1 November 2014,800 000 shares were issued fully paid up at the current market value of these shares.On 1 March 2015,300 000 partly paid-up ordinary shares were issued at an issue price of €3.50.These shares were partly paid to €2.00.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price. For the year ended 30 June 2015,the net income after tax was €1 050 000. What are the basic earnings per share for Cavendish Plc for the year ended 30 June 2015?

Awake Plc has a net income after tax of £5 620 000 for the year ended 30 June 2016.At the beginning of the period Awake Plc has 1 000 000 fully paid-up ordinary shares on issue.On 1 February 2016,Awake Plc makes a rights issue of 1 fully paid share for every 4 shares held.The required payment for the rights issue shares was £3.00.The last cum rights price was £3.80.Awake Plc also has 2 000 000,£1.00,cumulative,7 per cent preference shares on issue for the whole period.The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. What are the basic earnings per share for the period ended 30 June 2015 in accordance with IAS 33?

In ranking dilutive potential ordinary shares,options and warrants are generally included first because they do not affect the numerator of the calculation.

For the purpose of calculating dilutive earnings per share,options on issue are:

IAS 33 requires disclosure of diluted EPS even when these numbers are equal.

According to IAS 33 the two factors that must be considered when calculating the earnings per share include how earning are defined and: