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Chapter 5
Example 5.6
Johnson Company had 4.25 million shares in issue at the start of the year and
made no new issues of shares during the year ended 31 December 20X4. On
that date, it had in issue $1m convertible loan stock, convertible on 31st Dec
20X6-20X9.
The conversion terms are as follows
Year of conversion Number of ordinary shares issued
on conversion of loan stock
20X6 1,035,000
20X7 888,000
20X8 725,000
20X9 500,000
The liability element of the loan stock has a carrying amount of $830,000 and
the effective interest rate is 10%. Assume a tax rate of 30%.
The earnings for the year were $1,105,000 giving rise to basic earnings per
share of 26.0 cents.
Required:
Calculate the fully diluted EPS for the year ended 31 December 20X4. Give
your answer in cents
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