Question 3 a) International Accounting Standard 33(IAS33), Earnings per Share (EPS) gives guidelines on how EPS should be calculated and reported. In line with IAS 33 explain what the following terms mean. (12 marks) i)Basic earnings per share. ii) Potentially dilutive security. iii) Diluted earnings per share. iv)Complex capital structure. v)Potential ordinary shares. vi) What are the computational guidelines for determining whether a convertible security is to be reported as part of diluted earnings per share? b) A portion of the statement of Income and retained earnings of Savenda Ltd. for the current year is as follows. Income from continuing operations Loss on discontinued operations, net of applicable income tax Net income Retained earnings at the beginning of the year Dividends declared: On preference shares-K6.00 per share On ordinary shares-K1.75 per share Retained earnings at the end of the year K 300,000 K15,000,000 1,340,000 13,660,000 83,250,000 96,910,000 14,875,000 15,175,000 K81,735,000 Page 4 of 5 || At the beginning of the year Savenda Ltd. Had 7000,000 ordinary shares. On April 1 of the current year, Savenda Ltd. issued 1,000,000 ordinary shares for K32 pershare to so as to help recover from the loss suffered on discontinued operations. At the end of the current year Savenda Ltd. has 8,000,000 outstanding ordinary shares of K10 par and 50,000 shares of 6% preference shares. Required i)Calculate the Net income available for ordinary shareholders (4 marks) ii)Compute Weighted-average number of shares outstanding (4 marks) iii)Compute the earnings per share on ordinary shares from continuing operations for the current year as it should be reported to shareholders.(3 marks) iv)Compute the earnings per share on ordinary shares from discontinued operations for the current year as it should be reported to shareholders.(3 marks) v)Prepare the income statement extract to show how the EPS will be presented (4 marks) 4 of 5 Total :30 marks