1701/110.209 MAN/ALEB Distance/Internal ASR NSB CP5 SECTION B-COMPULSORY Record your answers in the Yellow Answer Booklet provided. QUESTION 2: EPS AND REVENUE RECOGNITION Question 2 consists of two separate parts, Part 1 and Part 2. Both parts are compulsory Part 1 For the reporting period ended 30 June 2015, Delaney Ltd. reported the following (i.) Profit after tax for the year of $1.2 million. (i.) Delaney Ltd.commenced the year with 400,000 fully paid ordinary shares The following issues were made during the year: (ii.) Delaney Ltd. issued 80,000 fully paid ordinary shares on 1 November 2014 at the prevailing market price e company purchased back 50,000 fully paid ordinary shares on 1 March 2015 at the prevailing market price. It issued 100,000 partly paid ordinary shares on 1 June 2015 at an issue price of $2.00. The shares were partly paid to $1.00. The partly paid shares carry the right to participate in dividends in proportion to the amount paid as a fraction of the issue price. (iv.) For the entire year Delaney Limited had 500,000 $1.00 preference shares, which provides dividends at a rate of 10 per cent per year. The dividend rights are cumulative Required: (10 marks) Calculate the basic earnings per share for 2015 for Delaney Ltd. (a) (5 marks) Briefly explain the difference between INCOME and REVENUE. (b) Part 2 Adams Ltd provides a bundled service offering to Bayleys Ltd. It charges Bayleys Ltd $35,000 for initial connection to its network and two ongoing services-access to the network for 1 year and 'oncall trouble-shooting' advice for that year. Bayleys Ltd pays the $35,000 upfront, on 1 July 2015. Adams Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be Connection fee $5,000 $12,000 Access fee Troubleshooting $23,000 The end of Adams Ltd reporting period is 30 June. Page 5 of 12