AMD Bhd is a growing semi-conductor producer in Malaysia. For the last three years, AMD Bhd has experienced rapid sales growth as the demand for its products expanded nationwide. Partial Statement of Financial Position of AMD Bhd as at 1 January was as follows: 2019 2018 (RM'000) (RM'000) Share Capital Ordinary share, 20,000,000 units issued and fully paid 100,000 100,000 Reserves Retained Earnings 160,000 140,000 Other reserves 50,000 30,000 Long term debt 10%, Convertible loan stock A 50,000 50,000 8%, Convertible 8% loan stock B 20,000 Additional information: 1. Net income for the year ended 31 December 2018 and 2019 were RM20,000,000 and RM25,000,000 respectively. 2. On 3 January 2019, AMD Bhd bought back 2,000,000 units of its own shares at the prevailing market price of RM6.00 per share. 3. On 1 March 2019, the board of directors of AMD Bhd authorised the exercise of bonus issues for all existing shares on the ratio of 1 for 1. 4. The 10% convertible loan stock A and the 8%, convertible loan stock B were issued on 1 January 2018 and 1 January 2019, respectively. Each RM1,000 of these loan stocks is convertible into 500 ordinary shares. On 1 September 2019, twenty percent (20%) of the 10%, convertible loan stock was converted to ordinary shares. 5. AMD Bhd approved an employee share option scheme (ESOS) on 1 January 2017 with an exercise price of RM5 per share for all key executive directors of the company as follows: Name of Units at Units Units Unit Units at directors 1 Jan 2019 granted exercised lapse 31 Dec 2019 Dato' Ahmad 400,000 0 0 0 400,000 Dato' Ooi 400,000 0 0 0 400,000 Dato' Sammy 200,000 0 100,000 0 100,000 Only 100,000 units of the ESOS has been exercised on 1 October 2019. The average market price of the shares for the year 2019 was RM7 while the share price on 31 December 2019 was RM7.50. 6. The corporate tax rate was constant for both years at 24%.The new account executive of AMD Bhd, Mr Boboboy, was concerned about the volatility of AMD's earnings per share (EPS). He stressed that AMD Bhd must be making high earnings and must have stable growth in AMD's EPS. Therefore, the management team must make sure the company's EPS target is achieved even if it resorts to applying creative accounting techniques. REQUIRED: (a) Calculate comparative basic earnings per share (BEPS) for AMD Bhd for the years ended 31 December 2018 and 2019. (4 Marks) (b) Prepare a table of earnings per incremental share (EPIS) for all potential ordinary share (POS) for the year ended 31 December 2019. (6 Marks) (c) Calculate diluted earnings per share (DEPS) for AMD Bhd for the year ended 31 December 2019 in accordance with MFRS 133 Earnings Per Share. (5 Marks) (d) Assumed independently that AMD Bhd is in dire need to provide immediate fresh capital for the group ongoing expansion project and offers renounceable rights issues on the basis of ONE (1) rights issue for five existing shares with an exercise price of RM8. AMD has 10,000,000 ordinary shares outstanding in 2018 and 2019. The offer was made on 1 July 2018 and expired on 30 June 2019. The fair value of AMD Bhd share on 29 June 2019 was RM10. Net income for the year ended 2018 and 2019 were RM8,000,000 and RM9,000,000 respectively. Determine the basic earnings per share for AMD Bhd for the year 2018 and 2019. (4 Marks) (e) Earnings per share (EPS) is a popular financial ratio. It is easily accessible to investors as a company gives EPS figure on its annual reports. Often, it is the first ratio that investors look at for its powerful indication of company's profitability. Do you agree with Mr Boboboy's concern? Discuss THREE (3) reasons on whether it is appropriate to depend only on EPS figure to value a company's future performance. (6 Marks)