ACCA FR · Chapter 10 · Question 2 of 9
At 1 January Gadwall Co had 4 million ordinary shares in issue. On 1 April it issued a further 1.2 million shares at full market price. Earnings for the year to 31 December were $3,430,000. What is basic EPS?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 70 cents
Explanation
A full-price issue is time-weighted from the date of issue. Weighted average shares = 4m + (1.2m x 9/12) = 4.9m. EPS = $3,430,000 / 4.9m = 70 cents.
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