Daisy Plc has a net income after tax of €2 000 000 for the year ended 30 June 2013.At the beginning of the period Daisy Plc has 900 000 fully paid-up ordinary shares on issue.On 1 December 2012 Daisy Plc had issued a further 300 000 fully paid-up ordinary shares at an issue price of €2.00.On 1 March 2013 Daisy Plc made a one-for-six bonus issue of ordinary shares out of retained earnings.The last sale price of an ordinary share before the bonus issue was €2.50.At the beginning of the current period Daisy Plc also had 500 000,€1.00,5% cumulative preference shares on issue.The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. The basic earnings per share for the period ended 30 June 2012 was €1.50 per share.What are the earnings per share figure for the period ended 30 June 2013 and what are the comparative earnings per share for the previous year to be reported in the 2013 financial reports according to IAS 33?

Question

Quizplus · Accepted Answer

To calculate earnings per share (EPS), we need to adjust the number of shares outstanding due to bonus issue.
Weighted average number of shares for the current period:
= (900,000 * 9/12) + (1,200,000 * 3/12)
= 1,050,000
Net Income = €2,000,000
EPS for current period = 2,000,000/1,050,000 = €1.90
Adjustment for bonus issue:
= (1/6) * 1,050,000
= 175,000
Weighted average number of shares for the previous period:
= 900,000
+ (300,000*9/12)
+ (175,000*3/12)
= 1,087,500
EPS for previous period = €1.50
Adjusted EPS for previous period = (1.50 * 1,050,000)/1,087,500 = €1.45
Comparative EPS for previous period to be reported in 2013 financial reports according to IAS 33 = €1.29 (which was previously reported).
Therefore, the answer is A) current period (2013) €1.58; previous period (2012) €1.29.

Daisy Plc Has a Net Income After Tax of €2