Page 379 - FR Integrated Workbook 2018-19

Answers

Example 4

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 per share for the year ended 31 December 20X2, as
originally calculated, was 18¢.

Required:
Calculate Robert’s restated comparative earnings per share for the year
to 31 December 20X2.

Solution
Bonus fraction (1 for 4) = 5/4
Restated earnings per share = 18¢ × 4/5 = 14.4¢

Rights 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 rights issue at a price
of $2.50 when the market price per share was $4.
Robert’s earnings per share for the year ended 31 December 20X2, as
originally calculated, was 18¢.
Required:

Calculate Robert’s restated comparative earnings per share for the year
to 31 December 20X2.

Solution

Rights issue bonus fraction (as calculated in Example 3 above) = 4/3.7
Restated earnings per share = 18¢ × 3.7/4 = 16.6¢

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