CeDe Ltd has issued share capital consisting of 800,000 ordinary shares. There are no preference shares. Some years ago, the company issued $1 million of 8% convertible loan stock, convertible in 2025 at the rate of two ordinary shares for every $10 of loan stock. The company's profit after tax for the year to 30 June 2020 is $640,000. Required:

i. Explain the terms basic earnings per share (EPS) and diluted EPS. (4 marks)

ii. Calculate the basic EPS for the year to 30 June 2020. (2 marks)

iii. Calculate the diluted EPS for the year to 30 June 2020, assuming the company pays tax at 20%. (6 marks)

(b) The profit after tax of DeEe Ltd to the year 31 December 2019 was $780,000. The comparative figure for the year to 31 December 2018 was $700,000. On 1 January 2018 and 1 January 2019, DeEe's issued share capital consisted of 900,000 ordinary shares of $1 each. On 1 July 2019, DeEe Ltd made a 1 for 4 rights issue at 50 cents per share. This issue was fully subscribed. The market value of DeEe's shares just before the rights issue was $1 per share. Required:

i. Calculate the basic EPS for the year to 31 December 2019.

ii. Calculate the restated basic EPS for the year to 31 December 2018.