CA Inter P1 · Chapter 2 · Question 9 of 12
Case: Kalinga Cement Ltd had 8,00,000 equity shares outstanding on 1 April. On 1 July it made a rights issue of 1 share for every 4 held at ₹60 per share; the fair value of a share immediately before the exercise of rights was ₹100. Profit for the year ended 31 March is ₹45,00,000. Basic EPS for the year under AS 20 (rounded to two decimals) is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹4.65
Explanation
Theoretical ex-rights fair value = (4 x 100 + 1 x 60) / 5 = ₹92.00. Adjustment factor = 100 / 92.00 = 1.0870. Weighted shares = 8,00,000 x 1.0870 x 3/12 + 10,00,000 x 9/12 = 9,67,391 (approximately). EPS = 45,00,000 / 9,67,391 = ₹4.65.
More Presentation and Disclosures Based Accounting Standards MCQs
- Q11Case: Ganga Retail Ltd prepares quarterly interim financial reports under AS 25. It expects to earn ₹40,00,000 for the year, evenly at…
- Q12Case: Neel Cosmetics Ltd incurs a large advertising campaign cost in the first quarter, although the benefits are expected through the…
- Q1AS 1 identifies three major considerations that govern the selection and application of accounting policies. Which of the following is NOT…
- Q2Case: Kaveri Pumps Ltd, a manufacturing company, paid interest of ₹6,40,000 on its term loans during the year. Under AS 3, Cash Flow…
- Q3Case: Extracts for Nandi Agro Ltd for the year are: net profit before tax ₹8,40,000; depreciation ₹1,20,000; profit on sale of machinery…