Daisy Ltd has a net income after tax of $2 000 000 for the year ended 30 June 2013.At the beginning of the period Daisy Ltd has 900 000 fully paid-up ordinary shares on issue.On 1 December 2012 Daisy Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00.On 1 March 2013 Daisy Ltd 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 Ltd 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 AASB 133?

Question

Quizplus · Accepted Answer

Step 1: Calculate the weighted average number of ordinary shares outstanding:
900,000 shares x 12/12 months = 900,000 shares
300,000 shares x 7/12 months = 175,000 shares
1-for-6 bonus issue: 1,200,000 shares x 2/6 = 400,000 shares
Total weighted average number of ordinary shares outstanding = 1,475,000 shares

Step 2: Calculate the earnings per share:
Net income after tax = $2,000,000
Earnings per share = $2,000,000 / 1,475,000 shares
Earnings per share = $1.36

Step 3: Calculate the comparative earnings per share for the previous year:
Previous year's earnings per share = $1.50 per share
Adjusted for bonus issue = $1.50 x 6/7 = $1.29

Therefore, the answer is A) current period (2013) $1.58; previous period (2012) $1.29.

Daisy Ltd Has a Net Income After Tax of $2