The following information relates to Rose plc for the year ended 31 December 2019: £,000 Turnover Operating costs Trading profit Net interest payable Exceptional charges Tax expenses Profit after tax 700 476 224 2 222 77 145 66 79 Rose plc had 100,000 ordinary shares of £1 each in issue throughout the year. Rose plc has in issue warrants entitling the holders to subscribe for a total of 50,000 shares in the company. The warrants may be exercised after 31 December 2025 at a price of £1.10 per share. The average fair value of shares was £1.28. The company had paid an ordinary dividend of £15,000 and a preference dividend of £9,000 on preference shares classified as equity. Required: Calculate the basic EPS for Rose plc for the year ended 31 December 2019, in accordance with best accounting practice. Calculate the diluted EPS figure, to be disclosed in the statutory accounts of Rose plc in respect of the year ended 31 December 2019. Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure to the shareholders.
The following information relates to Rose plc for the year ended 31 December 2019: £,000 Turnover Operating costs Trading profit Net interest payable Exceptional charges Tax expenses Profit after tax 700 476 224 2 222 77 145 66 79 Rose plc had 100,000 ordinary shares of £1 each in issue throughout the year. Rose plc has in issue warrants entitling the holders to subscribe for a total of 50,000 shares in the company. The warrants may be exercised after 31 December 2025 at a price of £1.10 per share. The average fair value of shares was £1.28. The company had paid an ordinary dividend of £15,000 and a preference dividend of £9,000 on preference shares classified as equity. Required: Calculate the basic EPS for Rose plc for the year ended 31 December 2019, in accordance with best accounting practice. Calculate the diluted EPS figure, to be disclosed in the statutory accounts of Rose plc in respect of the year ended 31 December 2019. Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure 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 26P
Related questions
Question
The following information relates to Rose plc for the year ended 31 December 2019:
|
|
£,000 |
|
Turnover Operating costs Trading profit Net interest payable
Exceptional charges
Tax expenses Profit after tax |
700 476 224 2 222 77 145 66 79 |
Rose plc had 100,000 ordinary shares of £1 each in issue throughout the year. Rose plc has in issue warrants entitling the holders to subscribe for a total of 50,000 shares in the company. The warrants may be exercised after 31 December 2025 at a price of £1.10 per share. The average fair value of shares was £1.28. The company had paid an ordinary dividend of £15,000 and a preference dividend of £9,000 on preference shares classified as equity.
Required:
- Calculate the basic EPS for Rose plc for the year ended 31 December 2019, in accordance with best accounting practice.
- Calculate the diluted EPS figure, to be disclosed in the statutory accounts of Rose plc in respect of the year ended 31 December 2019.
- Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure to the shareholders.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning