Chapter 27

Earnings per share

27.1 (a)

Basic EPS is determined by dividing the earnings of the entity for the
reporting period by the weighted-average number of shares of the entity.
Paragraph 10 of AASB 133 states:
Basic earnings per share shall be calculated by dividing profit or loss attributable to
ordinary equity holders of the parent entity (the numerator) by the weighted average
number of ordinary shares outstanding (the denominator) during the period.
Earnings are determined after deducting any preference share dividends
appropriated for the financial year to the extent they have not been
treated as expenses of the entity. Preference share dividends are
deducted to provide earnings on the basis that the EPS is calculated
from the perspective of ordinary shareholders.
In considering subtracting preference dividends for the purpose of
calculating EPS, it is necessary to determine, in those periods where the
preference dividend is not paid, whether the preference shares are
cumulative or not. The characteristic of a cumulative dividend preference
share is that where dividends are not paid in a particular year, they must
be paid in later years before ordinary shareholders are entitled to receive
any dividends out of profits. If the preference dividend is not cumulative,
and no amount has been appropriated for the year, then it may be
ignored for the purpose of the EPS calculation.
AASB 133 also requires that earnings must be calculated to exclude the
following items:
Any portion attributable to outside equity interests; and
Any costs of servicing equity, paid or provided for, other than dividends on ordinary
shares and partly-paid shares.
As indicated above, in determining the number of shares we use a weighted average.
Specifically, paragraph 19 of AASB 133 states:
For the purpose of calculating basic earnings per share, the number of ordinary
shares shall be the weighted average number of ordinary shares outstanding during
the period.
In determining the weighted average number of shares, AASB 133 indicates that the number
is determined as the total of the number of ordinary shares of the entity outstanding as at the
reporting period adjusted as follows:

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(i)

increased by ordinary shares issued during the reporting period; and,

(ii)

decreased by reductions in the number of ordinary shares during the reporting period,
including by way of share buy-backs.

where (i) and (ii) are weighted by reference to the number of days from, respectively, the date
of issue of those shares, or the date of reduction, to the reporting date as a proportion of the
total number of days in the reporting period. The weighted average number of shares also has
to take into account mandatorily convertible securitiesthat is, securities that must
ultimately be converted to ordinary shares. As paragraph 23 of AASB 133 states:
Ordinary shares that will be issued upon the conversion of a mandatorily convertible
instrument are included in the calculation of basic earnings per share from the date the
contract is entered into.
The weighted average number of ordinary shares also needs to take into account partly paid
ordinary shares unless the partly paid ordinary shares carry no rights to participate in
earnings.
(b)

Diluted EPS is calculated and disclosed where an entity has on issue potential ordinary
shares that are dilutive. To determine diluted EPS, the weighted average number of shares
will be determined in accordance with the calculations provided for basic EPS, with the
inclusion of an additional factor based upon the weighted average number of potential
ordinary shares that the company may have had on issue throughout all, or part, of the
financial year. A potential ordinary share is broadly defined at AASB 133 as a financial
instrument or other contract that may entitle its holder to ordinary shares.
AASB 133 requires that in determining the weighted average number of shares for diluted
EPS we start with the number used to calculate basic EPS and then make adjustments to this
number. Paragraph 36 states:
For the purpose of calculating diluted earnings per share, the number of ordinary
shares shall be the weighted average number of ordinary shares calculated in
accordance with paragraphs 19 and 26, plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive potential ordinary
shares into ordinary shares. Dilutive potential ordinary shares shall be deemed to have
been converted into ordinary shares at the beginning of the period or, if later, the date
of the issue of the potential ordinary shares.
Specifically, we add the following (to the extent they are dilutive) to the weighted average
number of shares used to calculate basic EPS:

The weighted average number of shares deemed to be issued for no consideration;

The weighted average number of shares that are contingently issued;

The dilutive potential ordinary shares are weighted by the number of

days they were outstanding. Dilutive potential ordinary shares that have

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been issued since the beginning of the reporting period and remain
outstanding at reporting date are weighted by reference to the number
of days from their date of issue to the reporting date.
There is a general rule that if a potential ordinary share issue would increase EPS, it is not
considered to be dilutive and would be excluded from the calculation of diluted EPS. As
paragraph 41 of AASB 133 states:
Potential ordinary shares shall be treated as dilutive when, and only when, their
conversion to ordinary shares would decrease earnings per share or increase loss per
share from continuing operations.
Each type of potential ordinary shares (for example, convertible
preference shares, convertible notes and share options) must be
considered separately. Consideration must also be given to the
probability of conversion. If the conversion is at the option of the entity,
and the conversion is probable, then the potential ordinary shares must
be included in the diluted EPS calculation, even if their inclusion does not
dilute EPS.
In calculating earnings for diluted EPS we have to consider the effects on
earnings that would have occurred if those potential ordinary shares that
are dilutive were converted to ordinary shares. We work out revised
earnings as if the conversion of the potential ordinary shares had
actually occurred. Paragraph 33 of AASB 133 states:
For the purpose of calculating diluted earnings per share, an entity shall adjust profit
or loss attributable to ordinary equity holders of the parent entity, as calculated in
accordance with paragraph 12, by the after-tax effect of:
(a) any dividends or other items related to dilutive potential ordinary shares deducted
in arriving at profit or loss attributable to ordinary equity holders of the parent
entity as calculated in accordance with paragraph 12;
(b) any interest recognised in the period related to dilutive potential ordinary shares;
and
(c) any other changes in income or expense that would result from the conversion of
the dilutive potential ordinary shares.
(i) dividends, interest or other financing costs associated with dilutive potential
ordinary shares that have been recognised as expenses during the reporting
period; and
(ii) any other non-discretionary changes in revenues or expenses for the reporting
period that would result from the conversion of the dilutive potential ordinary
shares.
27.2

Potential ordinary shares are dilutive if the EPS is recalculated on the basis that the securities
were converted to ordinary shares, and the recalculated diluted EPS figure is less than the basic
EPS (which is based on the ordinary shares on issue). Potential ordinary shares would emanate
from such instruments as share options, convertible debentures and convertible preference shares.

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27.3

As paragraph 27 of AASB 133 explains:

Ordinary shares may be issued, or the number of ordinary shares outstanding may be reduced,
without a corresponding change in resources. Examples include:
(a) a capitalisation or bonus issue (sometimes referred to as a stock dividend);
(b) a bonus element in any other issue, for example a bonus element in a rights issue to
existing shareholders;
(c) a share split; and
(d) a reverse share split (consolidation of shares).
Paragraph 28 further explains:
In a capitalisation or bonus issue or a share split, ordinary shares are issued to existing
shareholders for no additional consideration. Therefore, the number of ordinary shares
outstanding is increased without an increase in resources. The number of ordinary shares
outstanding before the event is adjusted for the proportionate change in the number of
ordinary shares outstanding as if the event had occurred at the beginning of the earliest
period presented. For example, on a two-for-one bonus issue, the number of ordinary
shares outstanding before the issue is multiplied by three to obtain the new total number of
ordinary shares, or by two to obtain the number of additional ordinary shares.
The adjustment factor is provided on page 855 of the text.

27.4

Diluted EPS must be shown where an entity has on issue potential ordinary shares that are
dilutive. Paragraph 66 of AASB 133 states:
An entity shall present on the face of the income statement basic and diluted earnings per
share for profit or loss from continuing operations attributable to the ordinary equity
holders of the parent entity and for profit or loss attributable to the ordinary equity holders
of the parent entity for the period for each class of ordinary shares that has a different right
to share in profit for the period. An entity shall present basic and diluted earnings per share
with equal prominence for all periods presented.
Paragraph 67 further states:
Earnings per share is presented for every period for which an income statement is
presented. If diluted earnings per share is reported for at least one period, it shall be
reported for all periods presented, even if it equals basic earnings per share. If basic and
diluted earnings per share are equal, dual presentation can be accomplished in one line on
the income statement.
It is possible for earnings to be negative in a particular period. In this regard, paragraph 69 states:
An entity shall present basic and diluted earnings per share, even if the amounts are
negative (i.e. a loss per share).

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27.5

Yes, if there is a bonus issue we do need to adjust the previous periods EPS. The adjustment
factor is provided on page 855 of the textbook.

27.6

It should be noted that given that the preference dividends are cumulative, it does not matter
whether or not they have been paid. If they were non-cumulative, the right to the preference
dividend would be lost if they had not been declared, and, hence, for non-cumulative preference
shares, the dividend will only be deducted from earnings if the dividend has been appropriated.
Hence, earnings would be calculated as:
After-tax net profit
Less: Preference share dividends
Earnings for basic EPS

$1 200 000
(50 000)
$1 150 000

Determination of the weighted average number of ordinary shares

Portion
of year

Period
Fully paid ordinary shares
1/7/0931/10/09
1/11/0928/2/10
1/3/1030/6/10
Partly-paid ordinary shares
1/6/1030/6/10

No. outstanding

Weighted
average
no. of shares

123/365
120/365
122/365

400 000
480 000
430 000

134 795
157 808
143 726

30/365

100 000($1.00/$2.00)

4 110

Total weighted average number of ordinary shares

440 439

Basic earnings per share, therefore, is $1 150 000 440 439 = $2.6110
27.7

Earnings calculation
Net profit after tax
Less: Preference share dividends
Net profit after-tax less preference dividends
Theoretical ex bonus price

($3.00)(5) + 0
5+1

$1 000 000
(6 000)
$ 994 000
=

2.50

Adjustment factor = 2.50 3.00 = 0.8333

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Calculation of the weighted average number of ordinary shares and ordinary share equivalents
Portion
of year

Period
Fully-paid ordinary shares
1/7/0830/9/08
1/10/0830/4/09
1/5/0930/6/09

No.
outstanding

Adjustment
factor

600 000
750 000
900 000

0.8333
0.8333

92/365
212/365
61/365

Weighted
average
no. of shares
181 487
522 761
150 411
854 659

Basic earnings per share for 2009 would be: $994 000 854 659 = $1.1630
The comparative figures for 2008 would be adjusted for the bonus issue. The adjusted figure
would be: $2.30 0.8333 = $1.9166. Note that when determining the weighted average
number of shares for the current financial year, the number of shares outstanding prior to the
bonus issue is divided by the adjustment factor.
Failure to adjust previous periods earnings would provide misleading figures as it would appear
that the company was not performing as well, when in fact the reduction in EPS may be due to
the bonus issue.
27.8

Weighted
average
ordinary
shares

Fully-paid ordinary shares

365
365
30*
365

100 000 000

0.50
2.00

Earnings
$

Basic
EPS
$

100 000 000

15 000 000

308 219
100 308 219 $410 000 000 $4.09

1 July 200831 May 2009 is 335 days

1 June 200930 June 2009 is 30 days
Note: It is assumed that that holders of the partly-paid shares are entitled to dividends in
proportion to the paid-up amount of the shares.

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27.9

365
365
181
365
61
365

Weighted
average of
outstanding
ordinary
shares
3 200 000

2 400 000/0.75*

600 000/0.75*

396 712

1 000 000

167 123
3 763 835

Earnings
$

600 000**

EPS
$

$0.1594

* Calculation of adjustment factor

Adjustment factor =
where: Px = theoretical ex rights price =

Px
Po
(Po No) + Pr
No + 1

Where Po = last sale price or, if higher, the last bid price cum rights
No = the number of ordinary shares required for one right
Pr = the subscription price of the right (or the present value of the subscription
price payable in instalments) plus the present value of dividends forgone in
respect of ordinary shares required for one right not presently participating
in dividends
Px =
Px =
Px
Po

(1.50 3) + 0
4
1.125
=

1.125
1.50

= theoretical ex-rights price = $0.75

** Earnings
Profit after tax
Less outside equity interests
Less preference dividends

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$ 800 000
(100 000)
(100 000)
$ 600 000

277

27.10

Earnings
Basic $ (290 000 20 000)
Conversion of preference shares
1 000 000
Saved preference dividend

Shares

$270 000

2 000 000
500 000

20 000
$290 000

Diluted earnings per share

=
=

2 500 000
$290 000
2 500 000
$0.116

27.11 Paragraph 66 of AASB 133 states:

An entity shall present on the face of the income statement basic and diluted earnings per
share for profit or loss from continuing operations attributable to the ordinary equity
holders of the parent entity and for profit or loss attributable to the ordinary equity holders
of the parent entity for the period for each class of ordinary shares that has a different right
to share in profit for the period. An entity shall present basic and diluted earnings per share
with equal prominence for all periods presented.
Paragraph 67 further states:
Earnings per share is presented for every period for which an income statement is
presented. If diluted earnings per share is reported for at least one period, it shall be
reported for all periods presented, even if it equals basic earnings per share. If basic and
diluted earnings per share are equal, dual presentation can be accomplished in one line on
the income statement.
AASB 133 also requires that basic EPS must be presented even if the amounts are negative (a loss
per share).
It is commonly accepted that earnings will affect share prices. By dividing earnings by the number
of shares, and by making assumptions about the lags between earnings and cash flows, EPS data
may provide useful information to the marketplace in determining the appropriate market price of
the firms equity securities.
Apart from the shares on issue at reporting date, companies may also have issued certain
securities which may potentially be converted into ordinary shares. For example, the company
may have issued convertible preference shares, convertible notes, convertible debentures, or share
options all of which may potentially be converted into ordinary shares. The requirement to present
diluted EPS will show how EPS would have been affected if the securities in existence at
reporting date had actually been converted to ordinary shares. This helps to inform investors of
how the EPS could conceivably be affected in future.
27.12

365 days
365 days

9 750 000*

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278

51 days
365 days

$2.00** 3 250 000

$2.30

394 878
10 144 878

EPS

=
=

$3 750 000***
10 144 878
$0.3696

weighted average outstanding ordinary shares.

** the number of ordinary share equivalents is to be based on a weighted average determined by

reference to the number of days during the financial year that the relevant partly-paid ordinary
shares carried those rights to participate in dividends as a proportion of the number of days in
the financial year.
***

profit after tax.

27.13 The profit after tax earnings for each 6-month period is calculated using the first two columns
given in the question, as follows:
12 Months
to 30/6/09
17 500 000
5 500 000
12 000 000

Profit
Income tax expense
Profit after tax

6 Months
to 31/12/08
7 035 800
1 756 000
5 279 800

6 Months
to 30/6/09
10 464 200
3 744 000
6 720 200

Basic EPS
365 days
365 days

5 000 000

EPS

$12 000 000/5 000 000

5 000 000
=

$2.40

Diluted EPS
Options
As the options had not been on issue for the entire year, we must weight
them for the time they were outstanding. The Standard requires that we
consider the number of shares that would effectively be issued for no
consideration if these options are exercised. To determine this we make the
following calculation:
Options issued on 15 September 2008
Number of shares issuable:
Number of shares that would be issued at market price for
the actual proceeds of $25 000 000 = $25 000 000 $2.20
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10 000 000
11 363 636
279

Number of shares deemed issued for no consideration

(1 363 636)

As the above calculation is negative, meaning no shares would be issued for no consideration given
the current market price, and as the exercise of the options is not mandatory, then the above option
issue is not dilutive and can be ignored for the purposes of calculating diluted EPS.
Options issued on 25 March 2009
Number of shares issuable:
Number of shares that would be issued at market price for
the actual proceeds of $2 000 000 = $2 000 000 $2.20
Number of shares deemed issued for no consideration

1 000 000
909 091
90 909

As these options were not in place at the beginning of the year, they will be weighted for the
number of days they have been on issue: 90 909 107/365 = 26 650
Calculation of diluted EPS
$12 000 000
5 000 000 + 26 650

$12 000 000

5 026 650

$2.3873

27.14 Calculation of basic earnings per share

Weighted average
number of ordinary shares
Fully-paid ordinaries:
365/365 90 000 000 =
Partly-paid ordinaries:
365/365 1.00/2.00
10 000 000 ** =
Dividend reinvestment:
91/365 1 000 000 * =
Partly-paid call:
122/365 0.50/2.00
10 000 000 **

$
Earnings

Basic EPS

90 000 000
5 000 000
249 315
835 616
96 084 931

$23 000 000

$0.2394c

The effective date to commence weighting is after 31 March 2010i.e. 1 April 2010. At this
point the dividend became payable.

**

Partly-paid shares should be included in Basic EPS by calculating the fully-paid equivalent
number of shares. When a call is made in the period, the time weighting should commence
from the date the call is due and payable. In this case the closing date is 28 February 2010.

Calculation of diluted EPS

We need to consider those securities which are potential ordinary shares. The options and partlypaid shares are potentially dilutive. Each security must be considered separately. For both options
and partly-paid shares, there will be an inflow of funds into the organisation when the option is

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2710

exercised, or the call is paid. For the options, the Accounting Standard assumes that there will
only be an inflow of funds if the exercise price is less than the market price. The weighted average
number of shares used to calculate diluted EPS is adjusted for options and partly-paid ordinary
shares by adjusting for the number of ordinary shares that are assumed to be issued for no
consideration (this can be contrasted to convertible instruments, such as convertible notes or
convertible preference shares, where the adjustment takes into account the maximum number of
ordinary shares to be issued as well as an adjustment to earnings).
Calculate earnings per incremental share
Partly-paid shares
There is no adjustment to earnings for the capital inflow associated with the partly-paid shares.
Their conversion is deemed to be mandatory, hence they would be ranked last if we apply the
trigger test. To determine the number of shares deemed issued for no consideration, we must
acknowledge that at least $0.50 was outstanding on the partly-paid shares for the entire year, with
$1.00 being outstanding until 28 February.
To account for period to call date of 28 February:
Number of shares issuable: 10m ($1.00 $2.00) = 5m
Number of shares that would be issued at market
price for the actual proceeds of $10: ($10m $2.50) = 4m
Number deemed issued for no consideration
1m (243 365)
To account for period from call date of 28 February:
Number of shares issuable: 10m ($0.50 $2.00) = 2.5m
Number of shares that would be issued at market
price for the actual proceeds of $10: ($5m $2.50) = 2m
Number deemed issued for no consideration
0.5m (122 365)

665 753

167 123
832 876

Share options issued on 1 January 2008

As they were on issue at the beginning of the year, they are potentially dilutive for the entire year.
We need to consider the number of shares that would effectively be issued for no consideration if
these options were exercised (if shares were effectively issued for no consideration then that
would encourage the options holders to exercise the option; there would be no incentive to
exercise the option if they were not effectively getting something for free).
Number of shares issuable
10 000 000
Number of shares that would be issued at market price
10 400 000
for the actual proceeds of $26m = $26 m $2.5
Number deemed issued for no consideration
(400 000)
We can see that no shares would effectively be issued for no consideration as the above number
is negative. As the price to be paid for the shares (the exercise price) is greater than the market
price of the shares, they would not be deemed to be shares issued for no consideration, and
hence can be ignored for the purposes of calculating diluted EPS. They are ignored because as the
market price is less than the exercise price, it is not likely that the options would be exercised
under the current market conditions.

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2711

Share options issued on 30 June 2008

As they were on issue at the beginning of the year, they are potentially dilutive for the entire year.
Number of share issuable @ $2.10
10 000 000
Number of shares that would be issued at market price
8 400 000
for the actual proceeds of $21m = $21 m $2.5
Number of shares deemed issued for no consideration
1 600 000
As the number of shares would increase, but notional earnings is not adjusted, the above issue is
deemed to be dilutive.
In determining diluted EPS, we will ignore any potential ordinary shares that are not dilutive. In
this case, the share option issue made on 1 January 2008 is ignored. As the option issue on 30
June 2008 increases potential ordinary shares without increasing earnings, and as the partly-paid
shares also increase the number of shares without increasing earnings, then the trigger test would
be deemed to be met.
Profit
As reported for
basic EPS

Ordinary shares

$23 000 000

96 084 931

Options

Nil

1 600 000

Partly-paid
shares

Nil

832 876

$23 000 000

98 517 807

Diluted EPS = $23 000 000 98 517 807 = $0.2335.

Again, as the option issue made on 1 January 2008 is not dilutive, it is not included in the
calculation of diluted EPS. However, had its conversion been mandatory, it would be included even
though the effect is anti-dilutive.

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27.15 Calculation of basic earnings per share

1 July 2010

Fully-paid
ordinary
shares
75 000 000

1 May 2011

100 000 000

304
365
61
365

Basic earnings per share

0.8514*

16 712 329
90 080 609
=

$70 000 000

90 080 609
$0.777

=
* Theoretical ex-rights price

((2.50 0.035) 3) + 1
3+1

Adjustment factor

2.09875
2.465
0.8514

73 368 280

= 2.09875

Calculation of diluted EPS

We need to consider those securities which are potential ordinary shares. The convertible
notes and options are potentially dilutive. Each security must be considered separately.
Share options
As the options have been on issue for the entire year, we treat them as
potentially dilutive as of the beginning of the year. The Standard requires
that we consider the number of shares that would effectively be issued
for no consideration if these options are exercised. To determine this we
make the following calculation:
Number of shares issuable (exercise price $2):
Number of shares that would be issued at market price for
the actual proceeds of $20 000 000 = $20 000 000 $2.50
Number of shares deemed issued for no consideration

10 000 000
8 000 000
2 000 000

Given that the Standard requires that there is no adjustment to earnings in relation to the
options, the earnings per incremental share is $nil. 2 000 000 shares will be added to the
denominator to calculate diluted EPS.
Convertible notes
If the notes were converted to ordinary shares, the pre-tax earnings
would be increased by $500 000 (the interest expense which would no
longer be payable which is equal to 2 000 000 $2.50 10%). This
would lead to an after-tax increase in earnings of $300 000, which is
$500 000 (1 0.40).
As an additional 2 000 000 shares would be created, the increase in
earnings attributable to ordinary shareholders on conversion of the
convertible debentures would, on an incremental share basis, be: $300
000 2 000 000 = $0.15
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2713

We must now rank the above potential ordinary shares in order from greatest to least
dilution
AASB 133 requires that when we consider whether potential ordinary shares are dilutive, each
issue or series of potential ordinary shares must be considered separately, rather than in
aggregate. Each issue or series of potential ordinary shares must be considered in sequence
from the most dilutive (smallest earnings per incremental share) to the least dilutive (largest
earning per incremental share). In this question, the order from most dilutive to least dilutive
is:

Options
Convertible notes

Increase in shares
2 000 000
2 000 000

Earnings per
incremental share
$nil
$0.15

We must now determine the trigger test

AASB 133 includes a trigger test to determine whether potential ordinary shares are dilutive.
If the shares cause EPS to decrease from the initial amount determined for the trigger test, then
they are considered dilutive. The Standard uses net profit or loss from continuing ordinary
operations as the initial amount for the trigger test to determine whether potential ordinary
shares are dilutive (however, it requires that the earnings figure used in the actual calculation
of diluted EPS include discontinuing operations, adjustments for changes in accounting policies
and corrections of fundamental errors). Paragraph 42 of AASB 133 states:
An entity uses profit or loss from continuing operations attributable to the parent
entity as the control number to establish whether potential ordinary shares are dilutive
or antidilutive. Profit or loss from continuing operations attributable to the parent
entity is adjusted in accordance with paragraph 12 and excludes items relating to
discontinued operations.
The net profit or loss from continuing operations excludes amounts relating to discontinuing
operations; adjustments for changes in accounting policies that affect the current reporting
period but relate to prior reporting periods; and corrections of fundamental errors. We will
assume that in this question it is also equal to $70m.
Apply trigger test
We have already determined the order in which to include potential ordinary shares in the
calculation of diluted EPS.

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2714

Profit and
adjustments
Net profit from
continuing ordinary
operations

Ordinary
shares

$70 000 000

90 080 609

Nil

2 000 000

$70 000 000

92 080 609

$300 000

2 000 000

$70 300 000

94 080 609

Options

Convertible notes

EPS

Dilutive?

$0.7771

$0.7602

Yes

$0.7472

Yes

In the above calculation, profit or loss from continuing operations is the starting point in the
trigger test. After this point, each potential ordinary share is considered in order of smallest
earnings per incremental share to largest earnings per incremental share. If a particular security
does not dilute EPS then it is not to be included when calculating diluted EPS, unless the
conversion is mandatory, or conversion is probable and at the option of the entity.
Calculation of diluted EPS
Profit
As reported for basic
EPS
Options
Convertible
debentures

Ordinary shares

$70 000 000

90 080 609

Nil

2 000 000

$300 000

2 000 000

$70 300 000

94 080 609

Diluted EPS = $70 300 000 94 080 609 = $0.7472.

27.16
Calculation of Basic Earnings
Profit attributable to Members of the Parent Entity
$16 488 000
Less Preference Share Dividends (30/9/2008)
$360 000
Less Cumulative Preference Dividends not paid, nor Provided for (31/3/2009)
[$6 000 000 x 0.06]
$360 000
Basic Earnings, based upon Total Profit
$15 768 000
Add Loss from Discontinuing Operations after related Income Tax
Basic Earnings, based upon Profit from Continuing Operations

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$492 000
$16 260 000

2715

The preference shares issued on 1 March 2009 were not entitled to dividends at 30 June 2009
and no partial dividend entitlement has been accrued.
Calculation of Basic Weighted Average Number of Shares
Share Issue
Weighting

Original 1/7/2008
Public Issue 1 December 2009
Partly Paid Shares
Rank for Dividends 1 April
2009
Share Buy Back 1 May 2009
Total

1 = 365/365
212/365
91/365
61/365

Number of Shares

4 600 000
8 000 000
= 480 000 x 0.3
= 144 000

Weighted average
num
ber
of
share
s
4 600 000
4 646 575
35 901

(260 000)

(43 452)
9 239 024

Calculation of Basic EPS, based upon Profit from Continuing Operations

Basic EPS = Basic Earnings, based upon Profit from Continuing Operations = 16 260 000 = $1.7599 per share
Basic Weighted Average Number of Shares
=
9 239 024

Calculation of Basic EPS, based upon Total Profit

Basic EPS = Basic Earnings, based upon Total Profit .
Basic Weighted Average Number of Shares

=
=

15 768 000
9 239 024

Solutions Manual t/a Australian Financial Accounting 5/e by Craig Deegan

=$1.7067 per share

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