IAS 33 [Basic EPS] – QUESTIONS (1)

PRACTICE QUESTIONS
Question No. 1
Qureshi Ltd (QL) had an issued share capital of 2000 shares on January 1, 2016. During the year following share issuestook
place:
 On April 1, 2016 QL issued 1000 shares against cash at full market price.
 On July 1, 2016 QL made a bonus issue of 1 for 5.
 On November 1, 2016 QL made a right issue of 1 for 3 at an exercise price of Rs. 18 per share when market price wasRs.
24 per share.
Net profit before tax and profit after tax for the year were Rs. 540,000 and Rs. 420,000 respectively.
Required:
Calculate basic earnings per share for 2016.

Question No. 2
Yasir Ltd (YL) is a listed company. Following financial information relates to years ending December 31, 2016 and 2015:
2016 (Rs.) 2015 (Rs.)
Profit before tax 175,000 120,000
Taxation:
Current tax expense 20,000 29,000
Deferred tax expense / (income) 12,000 (11,000)
Share capital (Rs. 10 each) 150,000 100,000
10% redeemable preference shares 240,000 200,000
12% irredeemable preference shares 80,000 80,000
YL made following equity transactions:
 On July 1, 2015 YL issued 4,000 shares at full market price.
 On July 1, 2016 YL made a right issue of 1 for 5 at an exercise price of Rs. 20 per share when market price was Rs. 30per
share.
 On December 1, 2016 YL made a 25% bonus issue.
Required:
Calculate basic earnings per share for 2016 and 2015 as well as restated EPS for 2015.

Question No. 3
Gallant Ltd (GL) had an issued share capital of 5,000 shares of Rs. 10 each on January 1, 2016. During the year followingshare
transactions took place:
 On April 1, 2016 GL issued 1,000 shares against cash at full market price.
 On April 30, 2016 ordinary shares were split and each Rs. 10 face value existing share was replaced with two Rs. 5 face
value new shares.
 On November 1, 2016 GL made a bonus issue of 1 for 4.Net profit after tax for the year was Rs. 250,000.
Required:
Calculate basic earnings per share for 2016.

Question No. 4
Super Ltd (SL) had an issued share capital of 4,000 shares of Rs. 10 each on January 1, 2016. During the year followingshare
transactions took place:
 On July 1, 2016 SL issued 2,000 shares against cash at full market price.
 On September 30, 2016 ordinary shares were consolidated and every three Rs. 10 face value existing shares were
replaced with one Rs. 30 face value new share.
 On December 1, 2016 SL made a right issue of 1 for 4 at a discount of Rs. 3 per share on current market price of Rs.45
per share.
Net profit after tax for the year 2016 was Rs. 100,000. Basic EPS as reported in 2015 was Rs. 16 per share.
Required:
Calculate basic earnings per share for 2016 and restated earnings per share for 2015.

NASIR ABBAS FCA

 IAS 33 [Basic EPS] – QUESTIONS (2)

Question No. 5
Prema Ltd (PL) acquired 70% shares of Anhaar Ltd (AL) on January 1, 2016. Following information relates to both
companies for the year ending December 31, 2016:
PL (Rs.) AL (Rs.)
Profit after tax 240,000 180,000
Share capital (Rs. 10 each) 75,000 60,000
Retained earnings 990,000 625,000
PL made following equity transactions during 2016:
 On July 1, 2016 PL issued 2,000 shares at full market price.
 On November 1, 2016 PL made a right issue of 1 for 4 at an exercise price of Rs. 25 per share when market price wasRs.
30 per share.
On January 12, 2017 PL made a bonus issue of 1 for 5. Financial statements for the year 2016 were authorized in February
2017.
Required:
Calculate basic earnings per share for 2016 to be reported on consolidated income statement for 2016.

Question No. 6
Style Ltd (SL) has an issued share capital of 6,000 shares of Rs. 10 each on December 31, 2016. During the year 2016
following share transactions took place:
 On March 1, 2016 SL made a bonus of 1 for 6.
 On July 1, 2016 SL issued 1,500 shares at full market price.
 On November 30, 2016 SL made a right issue of 1 for 5 at an exercise price of Rs. 24 per share when cum-right market
price was Rs. 30 per share.
Net profit after tax for the year 2016 was Rs. 120,000 (comprising of Rs. 100,000 from continuing operations and Rs. 20,000
from discontinued operations) and preference dividend declared on irredeemable preference shares amounts toRs. 30,000.
Required:
Calculate basic earnings per share for 2016.

Question No. 7
The following information pertains to the financial statements of Home Dynamics Limited (HDL), a listed company, for theyear
ended 31 December 2016:
(i) Profit after tax for the year:
Rs. in million
Profit from continuing operations – net of tax 765
Profit from discontinued operations – net of tax 155
Profit after tax 920
(ii) Shareholders’ equity as on 1 January 2016 comprised of:
 10 million ordinary shares of Rs. 10 each, having market value of Rs. 25 each.
 4 million cumulative preference shares of Rs. 10 each entitled to a cumulative dividend at 10%.
(iii) On 31 March 2016, HDL announced 40% right shares to its ordinary shareholders at Rs. 25 per share. The entitlement
date of right shares was 31 May 2016. The market price per share immediately before the announcement date and
entitlement date was Rs. 28 and Rs. 32 respectively.
(iv) On 2 August 2016, HDL announced 20% bonus issue. The entitlement date of bonus shares was 31 August 2016.
(v) On 1 February 2017, the board of directors announced 20% cash dividend and 10% bonus issue being the final
dividend to the ordinary shareholders and 10% cash dividend for preference shareholders.
Required:
Calculate basic earnings per share for inclusion in HDL’s financial statements for the year ended 31 December 2016. Showall
relevant calculations. (10)
(Q-1, Spring 2017)

NASIR ABBAS FCA