- 10 Marks
CR – Nov 2023 – L3 – Q2a – IAS 33: Earnings Per Share
Calculation of basic and diluted earnings per share for Tofiakwa Plc, and advice on depreciation and decommissioning cost for Odehyieba Plc.
Question
a) The following information was extracted from the financial statements of Tofiakwa Plc for the financial year-end 30 June 2023 to determine the year’s basic earnings per share and diluted earnings per share:
| Item | Amount (GH¢) |
|---|---|
| Profit after tax from continuing operations | 1,925,000 |
| Non-controlling interests’ profit | 200,000 |
| Ordinary shares, 150,000 issued at GH¢2 | 300,000 |
| (This figure includes an additional 50,000 ordinary shares issued on 1/10/2022 for cash) | |
| 5% non-cumulative preference shares, 500,000 issued at GH¢1 | 500,000 |
| Average market price for one ordinary share during the year | 15 |
Additional Information:
- Tofiakwa Plc entered into a market transaction on 1 December 2022 to repurchase 12,000 ordinary shares at fair value.
- 20% convertible debentures: 4,000 debentures with an issue value of GH¢1,000 per debenture. Each debenture is convertible into ten ordinary shares. Holders of 3,800 convertible debentures converted their holdings into ordinary shares on 1 May 2023.
- The tax rate is 30%.
Required:
For Tofiakwa Plc for the year ending 30 June 2023, calculate:
i) The basic earnings per share. (5 marks)
ii) The diluted earnings per share. (5 marks)
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