Topic: IAS 33 - Earnings Per Share

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  • 4 Marks

FR – May 2021 – L2 – Q2c – Basic and Diluted Earnings Per Share under IAS 33

Calculate basic and diluted earnings per share based on the financial information provided.

Dome Ltd has 5,000,000 ordinary shares in issue and also had in issue in 2020:

  • GH¢1,000,000 of 14% convertible loan stock, convertible in three years at the rate of 2 shares for every GH¢10 of stock.
  • GH¢2,000,000 of 10% convertible loan stock, convertible in a year’s time at the rate of 3 shares for every GH¢5 of stock.

The total earnings in 2020 were GH¢1,750,000. The rate of income tax is 35%.

Required:
In accordance with IAS 33: Earnings Per Share, calculate the basic and diluted earnings per share.
(4 marks)

 

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  • 7 Marks

CR – Apr 2022 – L3 – Q2c – Earnings Per Share

Calculate and restate earnings per share (EPS) for the current and previous year, factoring in rights and bonus issues under IAS 33.

On 1 January 2020, Kalimba Ltd had 2 million ordinary shares in issue. On 30 April 2020, the company issued 270,000 ordinary shares at full market price. On 31 July 2020, the company made a rights issue of 1 for 10 at GH¢2. The fair value of the shares on the last day before the rights issue was GH¢3.10. On 30 September 2020, the company made a 1 for 20 bonus issue. Profit for the period was GH¢400,000. The reported earnings per share for the year ended 31 December 2019 was GH¢0.186.

Required:
Calculate the earnings per share (EPS) for the year ended 31 December 2020, and the restated EPS for the year ended 31 December 2019, in accordance with relevant International Financial Reporting Standards (IFRS).

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  • 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.

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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  • 5 Marks

CR – Nov 2019 – L3 – Q2d – IAS 33 – Earnings Per Share

Calculate the basic earnings per share for a parent company after share consolidation and issuance of new shares.

d) A parent company had 6 million, GH¢1 fully paid ordinary shares outstanding on 1 January 2018. On 1 April 2018, the company made a consolidation of existing shares in issue (i.e., a reverse share split) at nominal value, on a 2 for 3 basis. There was no special dividend, share repurchase, or other outflow of resources.

Having completed the consolidation of shares, a new share issue for 600,000 shares was made through an offer for sale at the market price of GH¢1.55 per share. The allotment was made on 1 September 2018 and the proceeds were due on 1 October 2018. The company’s (summarised) statement of profit or loss for the year ended 31 December 2018 as published showed:

Item GH¢’000
Revenue 15,740
Cost of sales and expenses (16,060)
Loss before interest and tax (320)
Finance costs (68)
Taxation (60)
Loss for the year (448)
Profit/(loss) attributable to: GH¢’000
Owners of the parent (478)
Non-controlling interests 30
Total (448)

The company also had in issue GH¢500,000 of 5% cumulative redeemable preference shares throughout the year ended 31 December 2018.

Required:
In accordance with IAS 33: Earnings per Share, calculate the basic earnings per share figure for the year ended 31 December 2018. (5 marks)

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  • 4 Marks

FR – May 2021 – L2 – Q2c – Basic and Diluted Earnings Per Share under IAS 33

Calculate basic and diluted earnings per share based on the financial information provided.

Dome Ltd has 5,000,000 ordinary shares in issue and also had in issue in 2020:

  • GH¢1,000,000 of 14% convertible loan stock, convertible in three years at the rate of 2 shares for every GH¢10 of stock.
  • GH¢2,000,000 of 10% convertible loan stock, convertible in a year’s time at the rate of 3 shares for every GH¢5 of stock.

The total earnings in 2020 were GH¢1,750,000. The rate of income tax is 35%.

Required:
In accordance with IAS 33: Earnings Per Share, calculate the basic and diluted earnings per share.
(4 marks)

 

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  • 7 Marks

CR – Apr 2022 – L3 – Q2c – Earnings Per Share

Calculate and restate earnings per share (EPS) for the current and previous year, factoring in rights and bonus issues under IAS 33.

On 1 January 2020, Kalimba Ltd had 2 million ordinary shares in issue. On 30 April 2020, the company issued 270,000 ordinary shares at full market price. On 31 July 2020, the company made a rights issue of 1 for 10 at GH¢2. The fair value of the shares on the last day before the rights issue was GH¢3.10. On 30 September 2020, the company made a 1 for 20 bonus issue. Profit for the period was GH¢400,000. The reported earnings per share for the year ended 31 December 2019 was GH¢0.186.

Required:
Calculate the earnings per share (EPS) for the year ended 31 December 2020, and the restated EPS for the year ended 31 December 2019, in accordance with relevant International Financial Reporting Standards (IFRS).

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  • 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.

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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  • 5 Marks

CR – Nov 2019 – L3 – Q2d – IAS 33 – Earnings Per Share

Calculate the basic earnings per share for a parent company after share consolidation and issuance of new shares.

d) A parent company had 6 million, GH¢1 fully paid ordinary shares outstanding on 1 January 2018. On 1 April 2018, the company made a consolidation of existing shares in issue (i.e., a reverse share split) at nominal value, on a 2 for 3 basis. There was no special dividend, share repurchase, or other outflow of resources.

Having completed the consolidation of shares, a new share issue for 600,000 shares was made through an offer for sale at the market price of GH¢1.55 per share. The allotment was made on 1 September 2018 and the proceeds were due on 1 October 2018. The company’s (summarised) statement of profit or loss for the year ended 31 December 2018 as published showed:

Item GH¢’000
Revenue 15,740
Cost of sales and expenses (16,060)
Loss before interest and tax (320)
Finance costs (68)
Taxation (60)
Loss for the year (448)
Profit/(loss) attributable to: GH¢’000
Owners of the parent (478)
Non-controlling interests 30
Total (448)

The company also had in issue GH¢500,000 of 5% cumulative redeemable preference shares throughout the year ended 31 December 2018.

Required:
In accordance with IAS 33: Earnings per Share, calculate the basic earnings per share figure for the year ended 31 December 2018. (5 marks)

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