On 1 January 2021, the beginning of the reporting period, Jupiter Ltd has 50 000 ordinary shares on issue. On 30 June 2021, Jupiter Ltd issued a further 20 000 ordinary shares for cash. On 1 November 2021, Jupiter Ltd repurchased 2 400 shares at fair value in a market transaction. The weighted average number of shares for use in the earnings per share calculation is:

Question

Quizplus · Accepted Answer

Weighted average number of shares for use in the earnings per share (EPS) calculation is calculated as follows:

Weighted average number of shares = [(Number of shares at the beginning of the period * Number of months) + (Number of shares issued during the period * Number of months from the date of issue)] / Number of months

Number of shares at the beginning of the period = 50,000
Number of shares issued during the period = 20,000 (issued on 30 June 2021)
Number of shares repurchased during the period = 2,400 (repurchased on 1 November 2021)

Number of months from 1 January 2021 to 30 June 2021 = 6
Number of months from 1 July 2021 to 1 November 2021 = 4

Therefore, the weighted average number of shares for use in the EPS calculation is:

[(50,000 * 6) + (20,000 * 4) - (2,400 * 4)] / 10 = 60,400

Hence, the answer is C.

On 1 January 2021, the Beginning of the Reporting Period