Alps Ltd has a net income after tax of $1 500 000 for the year ended 30 June 2019. At the beginning of the period, Alps Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 December 2018 Alps Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2019 Alps Ltd made a one-for-six bonus issue of ordinary shares out of retained earnings. The last sale price of an ordinary share before the bonus issue was $2.50. At the beginning of the current period Alps Ltd also had 500 000, $1.00, 8% cumulative preference shares on issue. The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. The basic earnings per share for the period ended 30 June 2018 was $1.50 per share. Required: a) Calculate the basic EPS amount for 2019 and provide the adjusted comparative EPS for 2018.  b) Explain what is diluted EPS. Give one example of a security that can dilute the basic EPS.

Question

Alps Ltd has a net income after tax of $1 500 000 for the year ended 30 June 2019. At the beginning of the period, Alps Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 December 2018 Alps Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2019 Alps Ltd made a one-for-six bonus issue of ordinary shares out of retained earnings. The last sale price of an ordinary share before the bonus issue was $2.50. At the beginning of the current period Alps Ltd also had 500 000, $1.00, 8% cumulative preference shares on issue. The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. The basic earnings per share for the period ended 30 June 2018 was $1.50 per share.
Required:
a) Calculate the basic EPS amount for 2019 and provide the adjusted comparative EPS for 2018. 
b) Explain what is diluted EPS. Give one example of a security that can dilute the basic EPS. 

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Other

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: The CIO and MD have different views on how the system analysis should be performed. Comment on whose...

A: Managerial accounting: Managerial accounting is more focused towards analyzing information and repor...

Q: Is Capital debit or credit?

A: As per Business Entity concept Business is treated as an entity which is different from Proprietor. ...

Q: Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a franch...

A: Franchise arrangement and performance obligation: The franchisor has multiple performance obligatio...

Q: What criteria determine whether a company can recognize revenue over time?

A: Revenue is recognized over time if one of the following conditions is met: The customer simultaneou...

Q: You are the partner responsible for quality control in Suta Excellence, A well-known audit firm. You...

A: The issues of internal control in each of the above situations are explained as follows:   1) The re...

Q: Define the term manufacturing company.

A: Definition: Accounting: Accounting is a system, or a process of collecting and organizing economic t...

Q: Reproduce and complete the following controlling and non-controlling interest table. Show your calcu...

A: Non controlling interest is the equity share of ownership in a subsidiary's equity.

Q: Sanaz Corporation sells computers under a 3-year warranty contract that requires the corporation to ...

A: a. Record any necessary journal entries in 2020: Date Accounts title and explanation Debit ($) Cr...

Q: Problem 1: Prepare journal entries for the following transactions from Angled Pictures. Customer LeS...

A: Journal entry: Journal entry is a set of economic events that can be measured in monetary terms. The...