CAF-6 · Chapter 11 · Question 10 of 15
Gamma Ltd has 1,000,000 ordinary shares. It has convertible bonds of Rs. 5,000,000 at 4% interest. The tax rate is 30%. What are the incremental earnings for diluted EPS purposes?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 140,000
Explanation
Incremental earnings = Interest saved net of tax. 5,000,000 x 4% = Rs. 200,000 interest. Net of 30% tax: 200,000 x 70% = Rs. 140,000.
More IAS 33 Earnings per share MCQs
- Q12If a company undertakes a share split after the reporting period but before the financial statements are authorized for issue, how should…
- Q13When calculating diluted EPS, share options are assumed to be exercised:
- Q14What is the primary objective of IAS 33 Earnings Per Share?
- Q15Zeta Ltd reported a profit of Rs. 1,850,000 and has 1,000,000 basic shares. It also has convertible options that would add Rs. 84,000 to…
- Q1Under IAS 33, how is basic earnings per share (EPS) calculated?