A company issues bonus shares for no consideration on 1 August 2014. For the reporting period ended 30 June 2015, the calculation of:
A) only basic earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements
B) only the diluted earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements
C) both basic earnings per share and diluted earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements
D) both basic earnings per share and diluted earnings per share may be adjusted retrospectively at the option of the entity for all periods that are presented in the financial statements

Question

Quizplus · Accepted Answer

Both basic earnings per share and diluted earnings per share must be adjusted retrospectively for all periods that are presented in the financial statements to reflect the impact of bonus shares issued for no consideration. This is because the bonus shares increase the number of shares outstanding and thus affect both basic and diluted earnings per share calculations. Therefore, both measures need to be adjusted to provide a consistent comparison across periods.

A Company Issues Bonus Shares for No Consideration on 1