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please help me answer this accounting question. i need the answers urgently please Hisa Company Ltd. was incorporated in 1988 with an issued share capital
please help me answer this accounting question. i need the answers urgently please
Hisa Company Ltd. was incorporated in 1988 with an issued share capital of 2,500,000 ordinary shares of Sh.10 each and 1,000,000 8% cumulative participating preference shares of Sh.10 each. All the shares were paid for in full. In 1992, the company issued 2,500 10% debentures of Sh.1000 each. The terms of issue stipulate that each debenture is convertible into 75 ordinary shares of Sh.10 each on 31 December 2003 and those not converted will be redeemed at par on 31 December 2008. On 1 March 1998, the company granted its directors options to take up 500,000 ordinary shares at a price of Sh.12 per share. On 1 April 1999, the ordinary shares were split into shares of Sh.2.50 each and on 1 December 1999 a further 3,000,000 ordinary shares were issued at fair value to satisfy the purchase of certain business rights acquired. On 2 December 1999, 200,000 of the above options were taken up when the fair value of the shares was Sh.6 each. The average fair value of the shares during the year was, Sh.5 each. The following information has been extracted from the consolidated income statements for the years ended 31 March 1999 and 31 March 2000. Net operating income Income from investments Net income before taxation and extraordinary items Taxation Net income after taxation Less: Minority interest Profit attributable to members of the group Extraordinary items Profit after tax and extraordinary items Dividends (Note 1) Retained profits for the year Retained profit brought forward Retained profit carried forward Note Dividends paid 31 March: On ordinary shares On preference shares 2000 Sh. '000' 19,800 420 20,220 1999 Sh. '000' 18,410 360 18,770 (7,630) 12,590 (1,270) 11,320 (2,000) 9,320 (4,000) 5,320 18,530 23,850 (6,920) 11,850 (1,440) 10,410 (1,500) 8,910 (3,200) 5,710 12,820 18,530 3,200 800 4,000 2,400 800 3,200 Required: (a) Calculate the basic earnings per share figure to be disclosed in the published accounts of Hisa Company Ltd. for the years ended 31 March 1999 and 31 March 2000. (12 marks) (b) (c) Calculate the diluted earnings per share figure to be disclosed in the published accounts of Hisa Company Ltd. for the year ended 31 March 2000. Assume a tax rate of 32.5% (10 marks) Discuss the usefulness of the earnings per share figure. (3 marks) (Total: 25 marks)Step by Step Solution
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