Page 426 - F2 Integrated Workbook STUDENT 2019
P. 426
Chapter 19
Example 5.6
Diluted EPS = 22c
$1,163,100 (W1)
DEPS = ––––––––––––– = 22.0c
5,285,000 (W2)
(W1) Notional earnings
If this loan stock was converted to shares the impact on earnings would be as
follows.
$ $
Basic earnings 1,105,000
Add notional interest saved
($830,000 × 10%) 83,000
Less extra tax $83,000 × 30% (24,900)
–––––––
58,100
–––––––––
Revised earnings 1,163,100
–––––––––
(W2) Notional weighted average of shares if conversion at highest
possible conversion
Basic number of shares 4,250,000
Notional extra shares 1,035,000
–––––––––
Revised number of shares 5,285,000
–––––––––
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