Potential Ordinary Shares

FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation

Explain potential ordinary shares with three examples as per IAS 33.

Question

IAS 33 – Earnings Per Share (EPS) requires entities to calculate basic and diluted earnings per share. However, diluted EPS and basic EPS will usually differ when there are potential ordinary shares in existence.
Required:

i. Explain the term “potential ordinary share” and provide THREE examples as stated in IAS 33. (3 Marks)
ii. Describe the procedure for ranking when there are several types of potential ordinary share in issue when calculating diluted EPS.
(3 Marks)

Answer

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Tags: Basic EPS, Convertible Bonds, Diluted EPS, Potential Ordinary Shares, Share Options
Level: Level 2

Topic: Earnings Per Share (IAS 33)
Series: NOV 2022

FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares

Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.

Question

The following information relates to Jumai Nigeria Limited for the year ended December 31, 2020.
Issued ordinary shares of 50k each N3,000,000
Profit for the year N18,000,000
Average market price of shares during the year was N70 per share. The potential financial instruments in existence in the company are detailed below:
i. 800,000 options with exercise price of N52.50.
ii. 5% convertible bond of N6,000,000. Each bond is convertible in year 2025 into ordinary shares at the rate of 30 new shares for every N100 bonds.
iii. 200,000 8% convertible preference shares at N10 per share. Each preference share is convertible in year 2024 at the rate of one ordinary share for every 25 preference shares held. The Company income tax rate is 30%. Assume that all the options are exercised.
Required:
Rank the potential ordinary shares and calculate the diluted EPS for the year ended December 31, 2020. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Convertible Bonds, Diluted EPS, Earnings Per Share, Options, Potential Ordinary Shares, Ranking Shares
Level: Level 2

Topic: Earnings Per Share (IAS 33)
Series: NOV 2022

FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)

State examples of potential ordinary shares according to IAS 33.

Question

IAS 33 on earnings per share defines potential ordinary shares as a financial instrument or other contract that may entitle its holder to ordinary shares at some time in the future.

Required:
State three examples of potential ordinary shares according to IAS 33.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dilution, Earnings Per Share, Potential Ordinary Shares

Topic: Earnings Per Share (IAS 33)
Series: NOV 2018

FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation

Explain potential ordinary shares with three examples as per IAS 33.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Basic EPS, Convertible Bonds, Diluted EPS, Potential Ordinary Shares, Share Options
Level: Level 2

Topic: Earnings Per Share (IAS 33)
Series: NOV 2022

FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares

Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Convertible Bonds, Diluted EPS, Earnings Per Share, Options, Potential Ordinary Shares, Ranking Shares
Level: Level 2

Topic: Earnings Per Share (IAS 33)
Series: NOV 2022

FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)

State examples of potential ordinary shares according to IAS 33.

Question

IAS 33 on earnings per share defines potential ordinary shares as a financial instrument or other contract that may entitle its holder to ordinary shares at some time in the future.

Required:
State three examples of potential ordinary shares according to IAS 33.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dilution, Earnings Per Share, Potential Ordinary Shares

Topic: Earnings Per Share (IAS 33)
Series: NOV 2018

Question Tag: Potential Ordinary Shares

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FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation

Explain potential ordinary shares with three examples as per IAS 33.

FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares

Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.

FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)

State examples of potential ordinary shares according to IAS 33.

FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation

Explain potential ordinary shares with three examples as per IAS 33.

FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares

Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.

FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)

State examples of potential ordinary shares according to IAS 33.

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FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation

Explain potential ordinary shares with three examples as per IAS 33.

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FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares

Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.

You're reporting an error for "FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares"

FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)

State examples of potential ordinary shares according to IAS 33.

You're reporting an error for "FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)"

FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation

Explain potential ordinary shares with three examples as per IAS 33.

You're reporting an error for "FR – Nov 2022 – L2 – Q6a – Potential Ordinary Shares in EPS Calculation"

FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares

Rank the types of potential ordinary shares and calculate the diluted EPS for Jumai Nigeria Limited.

You're reporting an error for "FR – Nov 2022 – L2 – Q6b – Potential Ordinary Shares"

FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)

State examples of potential ordinary shares according to IAS 33.

You're reporting an error for "FR – Nov 2018 – L2 – SB – Q2a – Earnings Per Share (IAS 33)"

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