Question 1

When the exercise price of a rights issue is lower than the market price of the shares,this is known as a:

Accepted Answer

A) premium element. 
B) bonus element. 
C) discount element. 
D) reduced element. 
A) premium element. 
B) bonus element. 
C) discount element. 
D) reduced element.

Question 2

The definition of earnings contained in IAS 33:

Accepted Answer

A) is net profit attributable to ordinary shareholders of the parent entity net of preference dividends. 
B) is net profit excluding earnings attributable to minority interests and measured before the costs of servicing equity other than dividends on ordinary shares are deducted. 
C) is net profit excluding earnings attributable to minority outside equity interests. 
D) excludes any cumulative preference dividends not paid in the period and is measured before the costs of servicing equity other than dividends on ordinary shares are deducted. 
A) is net profit attributable to ordinary shareholders of the parent entity net of preference dividends. 
B) is net profit excluding earnings attributable to minority interests and measured before the costs of servicing equity other than dividends on ordinary shares are deducted. 
C) is net profit excluding earnings attributable to minority outside equity interests. 
D) excludes any cumulative preference dividends not paid in the period and is measured before the costs of servicing equity other than dividends on ordinary shares are deducted.

Question 3

Cooren Plc has 1 520 000 ordinary shares on issue at the beginning of the year,1 July 2014.These shares were issued at £2.00 each and have a current market value of £3.50.On 1 October 2014,400 000 ordinary fully paid shares were issued for at the current market value of these shares.On 1 March 2015 Cooren Ltd bought back 100 000 shares originally issued at £2.50 for £3.25 each.What is the weighted-average number of shares calculated in accordance with IAS 33?

Accepted Answer

A) 1 515 178 
B) 1 785 753 
C) 1 751 707 
D) 1 820 000 
A) 1 515 178 
B) 1 785 753 
C) 1 751 707 
D) 1 820 000

Question 4

On a 1 July 2014,Mayorga Plc has 3 000 000 ordinary shares on issue at the beginning of the year.During the year the movements in the company's outstanding ordinary shares are as follows:
On 1 August 2014,a rights issue of 600 000 ordinary shares at current market price of €2.50
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 for Mayorga Plc for the year ending 30 June 2015 that is in accordance with IAS 33 Earnings per Share?

Accepted Answer

A) 3 549 042 
B) 3 587 242 
C) 3 614 286 
D) 3 800 000 
E) None of the given answers. 
A) 3 549 042 
B) 3 587 242 
C) 3 614 286 
D) 3 800 000 
E) None of the given answers.

Question 5

Discuss when potential ordinary shares are excluded from the calculation of diluted EPS?

Accepted Answer

There is a general rule that if a potent

Question 6

Gaslight Plc has earnings after tax of €1 260 000 for the year ended 30 June 2015.At the beginning of the period Gaslight had 570 000 fully paid-up ordinary shares on issue.On 30 December 2014 the company made a one-for-two bonus issue.The last sale price of the shares immediately prior to the bonus issue was €4.50 each.What are the earnings per share taking into account the bonus issue?

Accepted Answer

A) €3.32 
B) €1.47 
C) €1.87 
D) €3.00 
A) €3.32 
B) €1.47 
C) €1.87 
D) €3.00

Question 7

Pilbarra Plc has a profit after tax of £20 220 000 for the period ended 30 June 2015.Pilbarra Plc also has £15 000 000 of 5% cumulative preference shares.The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. As at 1 July 2014 there were 12 000 000 fully paid ordinary shares issued.Pilbarra Plc also has £6 000 000 in convertible debentures issued for the full year.It pays interest of 4.5% per annum and could be converted to 3 000 000 ordinary shares at the option of the debenture-holders.There are also 900 000 share options currently on issue with an exercise price of £4.50.The average market price for ordinary shares during the year was £6.90.In addition to the preference shares mentioned above,Pilbarra Plc also has 1 000 000,£1.00,4% cumulative convertible preference shares that are convertible at the option of the entity.It is probable that these preference shares will be converted some time in the next period.The tax rate is 33%.What are the diluted earnings per share for Pilbarra Plc in accordance with IAS 33?

Accepted Answer

A) £1.17 
B) £1.21 
C) £1.26 
D) £2.20 
A) £1.17 
B) £1.21 
C) £1.26 
D) £2.20

Question 8

According to IAS 33,the weighting applied to calculate the weighted-average number of shares is:

Accepted Answer

A) the number of days that the shares are outstanding as a proportion of the total number of days in the period. 
B) to weight the total number of shares by the market capitalisation value of each share. 
C) to weight the total number of shares on issue for the period by the proportion of the total number of shares or other equity instruments on issue during the period. 
D) to weight the number of shares calculated in accordance with IAS 33 by their issue price regardless of the period in which the shares were issued or their current market value. 
A) the number of days that the shares are outstanding as a proportion of the total number of days in the period. 
B) to weight the total number of shares by the market capitalisation value of each share. 
C) to weight the total number of shares on issue for the period by the proportion of the total number of shares or other equity instruments on issue during the period. 
D) to weight the number of shares calculated in accordance with IAS 33 by their issue price regardless of the period in which the shares were issued or their current market value.

Question 9

IAS 33 requires entities to disclose earnings per share and diluted earnings per share in the notes to the accounts.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following equity instruments would be considered to be ordinary shares for the purposes of IAS 33?

Accepted Answer

A) ordinary shares that receive a dividend at the discretion of the ownership group or its representatives 
B) preference shares that are entitled to a fixed low rate of dividends and an additional dividend when the rate of dividend to other classes of shares exceeds that fixed rate 
C) ordinary shares that have the right to a cumulative fixed rate of dividends 
D) ordinary shares that receive a dividend at the discretion of the ownership group or its representatives and preference shares that are entitled to a fixed low rate of dividends and an additional dividend when the rate of dividend to other classes of shares exceeds that fixed rate 
A) ordinary shares that receive a dividend at the discretion of the ownership group or its representatives 
B) preference shares that are entitled to a fixed low rate of dividends and an additional dividend when the rate of dividend to other classes of shares exceeds that fixed rate 
C) ordinary shares that have the right to a cumulative fixed rate of dividends 
D) ordinary shares that receive a dividend at the discretion of the ownership group or its representatives and preference shares that are entitled to a fixed low rate of dividends and an additional dividend when the rate of dividend to other classes of shares exceeds that fixed rate

Question 11

Describe the IAS 33 EPS disclosure requirements.

Accepted Answer

IAS 33 requires that basic EPS and dilut

Question 12

If an entity has both convertible preference shares and convertible notes outstanding at year-end paying the same amount of cash payment and convertible to equal numbers of ordinary shares,which security will cause the greater reduction in diluted EPS when converted and why?

Accepted Answer

The sequence in which potential ordinary

Question 13

IAS 33 Earnings per Share does not require entities to restate diluted earnings per share of any prior period presented for changes in the assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into ordinary shares.

Accepted Answer

A) True 
 B)False

Question 14

To maximise the dilution of basic earnings per share,discuss the requirements of IAS 33 Earnings per Share in determining whether potential ordinary shares are dilutive or antidilutive.

Accepted Answer

IAS 33 requires that,in determining the

Question 15

If a bonus or rights issue is made at the prevailing market price of the shares then there is no bonus element in the issue.

Accepted Answer

A) True 
 B)False

Question 16

In calculating earnings per share,as per IAS 33 Earnings per Share options issued by the entity are assumed exercised at the beginning of the period or,if later,the date of issue of the option.

Accepted Answer

A) True 
 B)False

Question 17

Rose Ltd has a net income after tax of £3 400 000 for the year ended 30 June 2015.At the beginning of the period Rose Plc has 1 800 000 fully paid-up ordinary shares on issue.On 1 October 2014 Rose had issued a further 200 000 fully paid-up ordinary shares at an issue price of £5.00.On 1 May 2015 Rose Plc made a one-for-four bonus issue of ordinary shares out of retained earnings.The last sale price of an ordinary share before the bonus issue was £5.50.The basic earnings per share for the period ended 30 June 2014 was £2.00 per share.What is the earnings per share figure for the period ended 30 June 2015 and the comparative earnings per share for the previous year to be reported in the 2015 financial reports according to IAS 33?

Accepted Answer

A) current period (2015) £1.67; previous period (2014) £2.00 
B) current period (2015) £1.34; previous period (2014) £2.50 
C) current period (2015) £1.83; previous period (2014) £1.50 
D) current period (2015) £1.40; previous period (2014) £1.60 
A) current period (2015) £1.67; previous period (2014) £2.00 
B) current period (2015) £1.34; previous period (2014) £2.50 
C) current period (2015) £1.83; previous period (2014) £1.50 
D) current period (2015) £1.40; previous period (2014) £1.60

Question 18

IAS 33 requires an entity to disclose basic earnings per share for discontinued operations on the face of the statement of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 19

According to IAS 33 for shares to be considered as being issued for no consideration,the price paid for the shares would need to be:

Accepted Answer

A) greater than the market price. 
B) greater than the issued price. 
C) less than the market price. 
D) less than the issued price. 
A) greater than the market price. 
B) greater than the issued price. 
C) less than the market price. 
D) less than the issued price.

Question 20

The calculation of the theoretical ex-rights price of a share may be expressed as:

Accepted Answer

A) aggregate market price per share immediately prior to exercise of rights plus dividends receivable on the shares divided by number of shares outstanding after the exercise of rights. 
B) aggregate market price per share immediately prior to exercise of rights plus proceeds from the exercise of rights divided by number of shares outstanding after the exercise of rights. 
C) aggregate market price per share immediately after the exercise of rights plus proceeds from the exercise of rights divided by number of shares outstanding before the exercise of rights. 
D) aggregate market price per share immediately after the exercise of rights plus proceeds from the exercise of rights divided by number of shares outstanding after the exercise of rights. 
A) aggregate market price per share immediately prior to exercise of rights plus dividends receivable on the shares divided by number of shares outstanding after the exercise of rights. 
B) aggregate market price per share immediately prior to exercise of rights plus proceeds from the exercise of rights divided by number of shares outstanding after the exercise of rights. 
C) aggregate market price per share immediately after the exercise of rights plus proceeds from the exercise of rights divided by number of shares outstanding before the exercise of rights. 
D) aggregate market price per share immediately after the exercise of rights plus proceeds from the exercise of rights divided by number of shares outstanding after the exercise of rights.

When the exercise price of a rights issue is lower than the market price of the shares,this is known as a:

The definition of earnings contained in IAS 33:

Discuss when potential ordinary shares are excluded from the calculation of diluted EPS?

According to IAS 33,the weighting applied to calculate the weighted-average number of shares is:

IAS 33 requires entities to disclose earnings per share and diluted earnings per share in the notes to the accounts.

Which of the following equity instruments would be considered to be ordinary shares for the purposes of IAS 33?

Describe the IAS 33 EPS disclosure requirements.

If an entity has both convertible preference shares and convertible notes outstanding at year-end paying the same amount of cash payment and convertible to equal numbers of ordinary shares,which security will cause the greater reduction in diluted EPS when converted and why?

IAS 33 Earnings per Share does not require entities to restate diluted earnings per share of any prior period presented for changes in the assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into ordinary shares.

To maximise the dilution of basic earnings per share,discuss the requirements of IAS 33 Earnings per Share in determining whether potential ordinary shares are dilutive or antidilutive.

If a bonus or rights issue is made at the prevailing market price of the shares then there is no bonus element in the issue.

In calculating earnings per share,as per IAS 33 Earnings per Share options issued by the entity are assumed exercised at the beginning of the period or,if later,the date of issue of the option.

IAS 33 requires an entity to disclose basic earnings per share for discontinued operations on the face of the statement of comprehensive income.

According to IAS 33 for shares to be considered as being issued for no consideration,the price paid for the shares would need to be:

The calculation of the theoretical ex-rights price of a share may be expressed as:

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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Exam 19: Earnings Per Share

When the exercise price of a rights issue is lower than the market price of the shares,this is known as a:

The definition of earnings contained in IAS 33:

Discuss when potential ordinary shares are excluded from the calculation of diluted EPS?

According to IAS 33,the weighting applied to calculate the weighted-average number of shares is:

IAS 33 requires entities to disclose earnings per share and diluted earnings per share in the notes to the accounts.

Which of the following equity instruments would be considered to be ordinary shares for the purposes of IAS 33?

Describe the IAS 33 EPS disclosure requirements.

If an entity has both convertible preference shares and convertible notes outstanding at year-end paying the same amount of cash payment and convertible to equal numbers of ordinary shares,which security will cause the greater reduction in diluted EPS when converted and why?

IAS 33 Earnings per Share does not require entities to restate diluted earnings per share of any prior period presented for changes in the assumptions used in earnings per share calculations or for the conversion of potential ordinary shares into ordinary shares.

To maximise the dilution of basic earnings per share,discuss the requirements of IAS 33 Earnings per Share in determining whether potential ordinary shares are dilutive or antidilutive.

If a bonus or rights issue is made at the prevailing market price of the shares then there is no bonus element in the issue.

In calculating earnings per share,as per IAS 33 Earnings per Share options issued by the entity are assumed exercised at the beginning of the period or,if later,the date of issue of the option.

IAS 33 requires an entity to disclose basic earnings per share for discontinued operations on the face of the statement of comprehensive income.

According to IAS 33 for shares to be considered as being issued for no consideration,the price paid for the shares would need to be:

The calculation of the theoretical ex-rights price of a share may be expressed as:

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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