Page 127 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Earnings per share

Example 5.7

Johnson Company had 4.25 million shares in issue at the start of the year and
made no new issue of shares during the year ended 31 December 20X4. On
that date, there were 740,000 outstanding options in issue which allowed option
holders to buy Johnson shares at an exercise price of $3.20.

The average fair value of ordinary shares was $4.30.

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.

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