AFA_Lec_34 - Advanced Financial Accounting Lecture-34...

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Advanced Financial Accounting Lecture-34 Earnings Per Share
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Question-1 On 30 September 2002, B & Co. made an issue at full market price of 1,000,000 ordinary shares. The company’s accounting year runs from 1 Jan. to 31 Dec. Relevant information for 2001 and 2002 is as follow: 2001 2002 Shares issue at 31 Dec. 8,000,000 9,000,000 Profit after tax 3,280,000 3,300,000 Required: Calculate EPS for 2001 and 2002.
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Solution Weighted average number of shares 2001 8,000,000 2002 Already issued 8,000,000 30 Sep. 2002 Fresh shares issued (1,000,000 x 3/12) 250,000 8,250,000
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Solution EPS = Earnings available for ordinary shareholders Weighted average No. of ordinary shares outstanding during the year EPS (2001) = 3,280,000 / 8,000,000 = Rs. 0.41 per share EPS (2002) = 3,300,000 / 8,250,000 = Rs. 0.40 per share
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Bonus Share
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2008 2009 Earnings / Profit Rs. 75,000 Rs. 80,000 Share at 1 Jan. 400,000 400,000 Bonus issue 100,000 100,000 Total shares 500,000 500,000 At 30 Sep. 2002 company made 100,000 shares as bonus issue. Required: Calculate EPS for 2008 and 2009
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This note was uploaded on 05/15/2010 for the course ACCOUNTING B97702031 taught by Professor Lyz during the Spring '09 term at Punjab Engineering College.

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AFA_Lec_34 - Advanced Financial Accounting Lecture-34...

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