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Answers

Example 2

Bonus issue

Robert had 6,000 ordinary shares in issue on 1 January 20X3.

On 1 April 20X3 Robert issued 1,500 shares in a 1 for 4 bonus issue.

Robert’s earnings for the year to 31 December 20X3 were $1,200.

Required:

Calculate Robert’s earnings per share for the year to 31 December 20X3.

Solution

Bonus shares are deemed to have been in issue for full year.
No of shares Fraction of Weighted
year held average
b/f 6,000

Bonus issue 1:4 1,500

———–—
Total 7,500 × 12 / 12 7,500
———–— ———–—

Earnings per share = 1,200 ÷ 7,500 = 16.0¢

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