A. Newport Ltd had an issued share capital at 1 April 2018 of: – $400,000 made up of $0.50 shares. – 100,000 $1 convertible preference shares receiving a dividend of $5.00 per share: – these shares were convertible in 2018 on the basis of 1 ordinary share for 2 preference shares. The company has the following loan capital outstanding: – $500,000 5% convertible loans: – the loan was convertible in 2018 on the basis of 250 shares for each $2,000 of loan; – the tax rate was 30%. Earnings for the year ended 31 March 2019 were $10,000,000 after tax. Required: i. Calculate the diluted EPS for 2019. ii. ii. Outline the need to disclose a diluted EPS figure and on the relevance of this to the shareholders.
A. Newport Ltd had an issued share capital at 1 April 2018 of: – $400,000 made up of $0.50 shares. – 100,000 $1 convertible preference shares receiving a dividend of $5.00 per share: – these shares were convertible in 2018 on the basis of 1 ordinary share for 2 preference shares. The company has the following loan capital outstanding: – $500,000 5% convertible loans: – the loan was convertible in 2018 on the basis of 250 shares for each $2,000 of loan; – the tax rate was 30%. Earnings for the year ended 31 March 2019 were $10,000,000 after tax. Required: i. Calculate the diluted EPS for 2019. ii. ii. Outline the need to disclose a diluted EPS figure and on the relevance of this to the shareholders.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 27E: Percy Company has 15,000 shares of common stock outstanding during all of 2019. It also has 2...
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A. Newport Ltd had an issued share capital at 1 April 2018 of:
– $400,000 made up of $0.50 shares.
– 100,000 $1 convertible preference shares receiving a dividend of $5.00 per share:
– these shares were convertible in 2018 on the basis of 1 ordinary share for 2 preference shares.
The company has the following loan capital outstanding:
– $500,000 5% convertible loans:
– the loan was convertible in 2018 on the basis of 250 shares for each $2,000 of loan;
– the tax rate was 30%.
Earnings for the year ended 31 March 2019 were $10,000,000 after tax.
Required:
i. Calculate the diluted EPS for 2019.
ii. ii. Outline the need to disclose a diluted EPS figure and on the relevance
of this to the shareholders.
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