Awake Ltd has a net income after tax of $5,620,000 for the year ended 30 June 2006.At the beginning of the period Awake Ltd has 1,000,000 fully paid-up ordinary shares on issue.On 1 February 2006 Awake Ltd 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 Ltd 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 income statement. What are the basic earnings per share for the period ended 30 June 2005 in accordance with AASB 133?

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The basic earnings per share is calculated as net income after tax divided by the weighted average number of ordinary shares outstanding during the period. The weighted average number of ordinary shares outstanding is calculated as the average number of shares outstanding during the period, taking into account the rights issue. The average number of shares outstanding during the period is calculated as the sum of the number of shares outstanding at the beginning of the period and the number of shares issued in the rights issue, divided by 2. The number of shares issued in the rights issue is calculated as the number of shares outstanding at the beginning of the period multiplied by the ratio of the number of rights issue shares to the number of shares held. The weighted average number of ordinary shares outstanding during the period is therefore:(1,000,000 + (1,000,000 x 1/4)) / 2 = 1,250,000 sharesThe basic earnings per share is therefore:$5,620,000 / 1,250,000 shares = $4.39

Awake Ltd Has a Net Income After Tax of $5,620,000