ExpertMedium2 marksMultiple Choice
ACCA · Question 10 · Analyzing and Interpreting Financial Statements
SECTION A
Meridian PLC had 2,000,000 ordinary shares in issue on 1 January 20X9. On 1 July 20X9, Meridian made a 1-for-4 bonus issue. Profit after tax for the year ended 31 December 20X9 was $750,000.
What is the basic Earnings Per Share (EPS) for the year ended 31 December 20X9?
SECTION A
Meridian PLC had 2,000,000 ordinary shares in issue on 1 January 20X9. On 1 July 20X9, Meridian made a 1-for-4 bonus issue. Profit after tax for the year ended 31 December 20X9 was $750,000.
What is the basic Earnings Per Share (EPS) for the year ended 31 December 20X9?
Answer options:
A.
37.5 cents
B.
33.3 cents
C.
30.0 cents
D.
25.0 cents
How to approach this question
Calculate the number of bonus shares. Remember that under IAS 33, bonus issues are not time-apportioned; they are treated as if they occurred at the start of the earliest period presented.
Full Answer
C.30.0 cents✓ Correct
Under IAS 33, a bonus issue does not bring in new resources, so the shares are treated as having been in issue for the whole year.
Original shares: 2,000,000.
Bonus issue (1 for 4): 500,000.
Total weighted average shares: 2,500,000.
EPS = $750,000 / 2,500,000 = $0.30 (30 cents).
Common mistakes
Time-apportioning the bonus shares because they were issued halfway through the year.
Practice the full ACCA FR — Financial Reporting Practice Exam 3
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