HKAS33

Entity A is a listed company in Hong Kong.

On 1 January 2020, the issued share capitals of Entity A were 25,000,000 preference shares of $1 each and 35,000,000 ordinary shares of $1 each respectively.

The profit tax rate is 30%. The earnings for the year ended 31 December 2020 were $9,950,000.

REQUIRED

Calculate the Basic EPS for (a), (b), (c), and (d) and Diluted EPS for (e) and (f) separately in respect of the year ended 31 December 2020 for each of the following circumstances, on the basis that:

(a) there was no change in the issued share capital of the company during the year ended 31 December 2020.

BEPS of (a) = $ per share

(b) the company made a bonus issue on 1 September 2020 of one ordinary share for every eight shares in issue on 31 August 2020.

BEPS of (b) = $ per share

(c) the company issued 1 share for every 10 on 1 April 2020 at the full market value of $6.00.

BEPS of (c) = $ per share

(d) the company made a rights issue of $1 ordinary shares on 1 September 2020 in the proportion of 1 of every 5 shares held, at a price of $3.50. The middle market price for the shares on the last day of quotation cum rights was $5.00 per share.

BEPS of (d) = $ per share

(e) the company made no new issue of shares during the year ended 31 December 2020, but on that date, it had in issue $8,650,000, 5% convertible bonds. These bonds will be convertible into ordinary $1 shares as follows:

• 2018 90 $1 shares for $100 nominal value bonds
• 2019 85 $1 shares for $100 nominal value bonds
• 2020 80 $1 shares for $100 nominal value bonds
• 2021 75 $1 shares for $100 nominal value bonds

DEPS of (e) = $ per share

(f) the company made no issue of shares during the year ended 31 December 2020, but on that date, there were outstanding options to purchase 8,440,000 ordinary $1 shares at $3.60 per share. The share price during the year was $6.40.

DEPS of (f) = $ per share