EPS Tutorial Exercises EPS PDF

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Advanced Financial Reporting – Tutorial Exercises Earnings Per Share (1) Exercise 1 At the beginning of its financial year, on 1 April 2006, Alexis Limited has 50m £1 ordinary shares in issue. On 1 July 2006, the company issues a further 10m £1 ordinary shares at full market price. No further ordinary shares are issued during the financial year. What is the number of shares that is to be used in the calculation of basic earnings per share, for the financial year ended 31 March 2007 a. b. c. d.

10m 50m 57.5m 60m

Exercise 2 For the earnings per share calculation required by IAS 33, the amount of the profit or loss attributable to ordinary equity holders is calculated after allowing for which of the following? I. II. III. IV.

Finance costs Tax Minority interests Dividends on preference shares a. b. c. d.

All of them I and II II and III II, III and IV

Exercise 3 The statement of comprehensive income (extract) of Wyvern Stores plc for 2006 is as follows: Statement of comprehensive income (extract) for the year ended 31 December 2006 Continuing Operations

£000

Profit before tax

540

Tax

(150)

Profit for the year from continuing operations

390

Discontinued Operations Loss for the year from discontinued operations

(60)

Profit for the year attributable to equity holders

330

The company’s share capital at 31 December 2006 is £20m ordinary shares of £1 each. No new shares were issued during the year.

Task 1 You are asked to calculate the basic earnings per share of Wyvern Stores plc for 2006.

Task 2 The company did consider making a new issue of £5m ordinary shares of £1 each at full market value on 1 July 2006. Although the issue did not go ahead, the finance director asks you to calculate what the EPS figure would have been for the year Note: calculate EPS in pence per share, to two decimal places

Exercise 4 The statement of comprehensive income (extract) of Kingston plc for 2008 is as follows: Statement of comprehensive income (extract) for the year ended 31 December 2008 Continuing Operations

£000

Profit before tax

960

Tax

(210)

Profit for the year from continuing operations

750

Discontinued Operations Profit for the year from discontinued operations

60

Profit for the year attributable to equity holders

810

The company’s share capital at 31 December 2008 is £40m ordinary shares of £1 each. No new shares were issued during the year.

Task 1 You are asked to calculate the basic earnings per share of Kingston plc for 2008.

Task 2 The company did consider making a new issue of £10m ordinary shares of £1 each at full market value on 1 October 2008. Although the issue did not go ahead, the finance director asks you to calculate what the EPS figure would have been for the year

Note: calculate EPS in pence per share, to two decimal places

Exercise 5

a) Explain what a bonus issue of shares is

b) Discuss advantages and disadvantages of a bonus issues of shares from the perspective of a shareholder and the issuing company

c) Profit attributable to the shareholders is profit for the period after deducting?

d) In the case of consolidated accounts, how is the profit attributable to the noncontrolling interest treated?

e) If a company reports a profit or a loss on discontinued operations, how is this accounted for?

f) If a company issues additional ordinary shares with a different nominal value, how is this accounted for?

g) What is the effect of a bonus issue on the calculation of EPS?

Exercise 6

A company’s profit after tax to June 2013 was £2.2 million. The comparative figure for the previous year was £2 million.

Issued share capital at 1/1/12 was 800,000 ordinary shares . No shares were issued during the year to June 2012 but a 1 for 4 bonus issue was made on 1 st March 2013.

Calculate the basic EPS to 30th June 2013 and the restated comparative figure for 30th June 2012

Exercise 7

On January 1st 2012, the following details applied:

Issues share capital 500,000 ordinary shares 01 Feb 2013 bonus share issue of 1 for 5 01 Dec 2013 120,000 ordinary shares were issued at full market price

Required: a) Calculate the number of shares to be used in the restated basic EPS for the year to 31/12/2012 b) Calculate the weighted average number of ordinary shares to be used in the calculation of basic EPS for the year to 31/12/13...