On 1 January 2013 the issued share capital of Polo Limited consisted of: 800 000 Ordinary shares of R5 each R4 000 000 100 000 13% Non-cumulative preference shares of R10 each R1 000 000 On 30 June 2013, 150 000 ordinary shares were issued at R8 per share to finance the acquisition of machinery to be imported from Japan. On 1 March 2014 the company made a capitalisation issue of 1 ordinary share for every 10 ordinary shares held to shareholders registered on 1 January 2014. The following was extracted from the statement of comprehensive income for the years ended 31 December: 2014 2013 Operating income 1 301 000 2 448 000 Profit on expropriation of vacant plot 128 000 Administrative expenses (41 000) (48 000) Profit before tax 1 388 000 2 400 000 Taxation expense (447 660) (664 440) Other comprehensive income _ _ Total comprehensive income 940 340 1 735 560 Extract from the statement of changes in equity for the year ended 31 December 2014 R 2013 R Dividends 13% non-cumulative preference shares 130 000 130 000 Ordinary shares 412 000 258 000 2 REQUIRED: SEPTEMBER 2015 QUESTION 3 (14 MARKS) 3.1 RECONCILIATION OF EARNINGS 2014 2013 Income after tax 940 340 1 735 560 Preference dividends (130 000) (130 000) Basic earnings 810 340 1 605 560 Profit on expropriation of vacant plot (128 000) Headline earnings 682 340 1 605 560 (4) 3.1 Show the reconciliation of earnings as it will appear in the notes to the financial statements for the year ending 31 December 2014.On 1 January 2013 the issued share capital of Polo Limited consisted of: 800 000 Ordinary shares of R5 each R4 000 000 100 000 13% Non-cumulative preference shares of R10 each R1 000 000 On 30 June 2013, 150 000 ordinary shares were issued at R8 per share to finance the acquisition of machinery to be imported from Japan. On 1 March 2014 the company made a capitalisation issue of 1 ordinary share for every 10 ordinary shares held to shareholders registered on 1 January 2014. The following was extracted from the statement of comprehensive income for the years ended 31 December: 2014 2013 Operating income 1 301 000 2 448 000 Profit on expropriation of vacant plot 128 000 Administrative expenses (41 000) (48 000) Profit before tax 1 388 000 2 400 000 Taxation expense (447 660) (664 440) Other comprehensive income _ _ Total comprehensive income 940 340 1 735 560 Extract from the statement of changes in equity for the year ended 31 December 2014 R 2013 R Dividends 13% non-cumulative preference shares 130 000 130 000 Ordinary shares 412 000 258 000 2 REQUIRED: SEPTEMBER 2015 QUESTION 3 (14 MARKS) 3.1 RECONCILIATION OF EARNINGS 2014 2013 Income after tax 940 340 1 735 560 Preference dividends (130 000) (130 000) Basic earnings 810 340 1 605 560 Profit on expropriation of vacant plot (128 000) Headline earnings 682 340 1 605 560 (4) 3.1 Show the reconciliation of earnings as it will appear in the notes to the financial statements for the year ending 31 December 2014.