CA Inter P1 · Chapter 2 · Question 8 of 12
Case: Aravali Steels Ltd reported earnings of ₹15,00,000 for the year ended 31 March 20X1 on 4,00,000 equity shares. On 1 January 20X2 it made a bonus issue of 1 share for every 4 held. When presenting comparatives in the financial statements for the year ended 31 March 20X2, the restated basic EPS for 20X0-X1 is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹3.00
Explanation
A bonus issue changes the number of shares without any change in resources, so under AS 20 it is treated as if it occurred at the beginning of the earliest period presented. Adjusted shares = 4,00,000 x 5/4 = 5,00,000. Restated EPS = 15,00,000 / 5,00,000 = ₹3.00. No time-weighting is applied to bonus shares.
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