IAS 33 [Diluted EPS] – QUESTIONS (1)
PRACTICE QUESTIONS
Question No. 1
Profit after tax for the year Rs. 1,200,000
Weighted average number of ordinary shares outstanding during the year 500,000 shares
Average market price per share for the year Rs. 20
Weighted average number of shares under option 100,000 shares
Exercise price for shares under option Rs. 15
Required:
Calculate basic EPS and diluted EPS for the year.
Question No. 2
Profit after tax for the year Rs. 1,200,000
Weighted average number of ordinary shares outstanding during the year 500,000 shares
Average market price per share for the year Rs. 20
Weighted average number of share options 100,000 shares
Cash exercise price for shares under option Rs. 17
Required:
Calculate basic EPS and diluted EPS for the year.
Question No. 3
The following information pertains to the financial statements of HDL, a listed company, for the year ended 31
December 2020:
(i) Profit for the year:
Rs.
Profit before tax 30,000,000
Tax [40%] (12,000,000)
Profit after tax 18,000,000
(ii) HDL has a share capital of Rs. 80 million (Rs. 10 each) and Rs. 20 million 5% convertible bonds (Rs. 100
each) in issue. Carrying amount on December 31, 2019 of the liability component of these bonds
amounted to Rs. 16.93 million with an effective interest rate of 8%. These bonds can be converted as
follows:
Each bond is convertible into 8 shares on December 31, 2024; OR
Each bond is convertible into 6 shares on December 31, 2025
Required:
Calculate basic EPS and diluted EPS for the year ended 31 December 2020.
Question No. 4
A company has an issued ordinary share capital of Rs. 100 million (Rs. 10 each) and Rs. 20 million (Rs. 100 each)
6% convertible bonds at start of year.
These bonds are convertible into ordinary shares in a ratio of 20 shares for every Rs. 100 bond at any time till
December 31, 2021. Tax rate is 30%. On April 1, 2020 50% of these bonds were converted into ordinary shares.
Ignore any difference between nominal amount and liability component for ease of calculations. Net profit for
the year ended December 31, 2020 amounts to Rs. 25.5 million.
Required:
Calculate basic EPS and diluted EPS for the year ending December 31, 2020.
Question No. 5
A company has an issued ordinary share capital of Rs. 150 million (Rs. 10 each) and Rs. 30 million (Rs. 100 each)
8% convertible bonds at start of year.
These bonds are convertible into ordinary shares in a ratio of 10 shares for every Rs. 100 bond at any time till
December 31, 2021. Tax rate is 25%. On May 1, 2020 30% of these bonds were converted into ordinary shares.
NASIR ABBAS FCA
IAS 33 [Diluted EPS] – QUESTIONS (2)
Ignore any difference between nominal amount and liability component for ease of calculations. Net profit for
the year ended December 31, 2020 amounts to Rs. 32.4 million.
Required:
Calculate basic EPS and diluted EPS for the year ending December 31, 2020.
Question No. 6
Rs.
Profit from continuing operations attributable to parent 16,400,000
Dividends on preference shares (6,400,000)
Profit from continuing operations attributable to ordinary shareholders of 10,000,000
parent
Loss from discontinued operations attributable to the parent (4,000,000)
Profit attributable to ordinary shareholders of parent 6,000,000
Ordinary shares outstanding during the year 2,000,000
Average market price of ordinary share during the year Rs. 75
Potential ordinary shares:
Options
100,000 with exercise price of Rs. 60
Convertible preference shares
800,000 shares with a par value of Rs. 100 entitled to a cumulative dividend of Rs. 8 per share. Each preference
share is convertible to two ordinary shares.
5% convertible bonds
Nominal amount Rs. 100,000,000. Each Rs. 1,000 bond is convertible to 20 ordinary shares. There is no
amortization of premium or discount affecting the determination of interest expense.
Tax rate 40%
Required:
Calculate basic EPS and diluted EPS
NASIR ABBAS FCA
