Basic earnings per share, Cost Accounting

What are 'potential' ordinary shares?  In your answer provide three examples to support your explanation.  Briefly outline the process (steps) to determine whether 'potential' ordinary shares are in fact, 'dilutive'.

Part Three

The following information relates to Russell Ltd for the year ending 30 June 2012:

Profit after tax for the Year Ending 30 June 2012

$2 100 000

Dividends on 200 000 convertible cumulative preference shares

$100 000

The preference shares have been disclosed as equity in the statement of financial position.  There were 250 000 fully paid ordinary shares as at 1 July 2011.  There were no additional shares issued during the year.

Additional Information

During the year ending 30 June 2012:

  • Russell Ltd had issued $500 000 in convertible debentures which paid interest at a rate of 5% per annum. They could be converted into 100 000 ordinary shares at the option of the debenture holders.
  • 250 000 share options had been issued, exercisable at $2.50 per option. The holder of each option has the right to purchase one share. The average share price in respect of ordinary shares for the year ending 30 June 2012 was $2.75 per share.
  • 200 000 convertible cumulative preference shares had been issued and are convertible into 80 000 ordinary shares at the option of the preference shareholders.
  • The company tax rate is 30% per annum.

Required

Calculate the following showing all steps applied and workings:

(i)  Basic earnings per share for the year ending 30 June 2012.

(ii)  The diluted earnings per share for the year ending 30 June 2012.  Show all workings for each step involved in determining which potential ordinary share is in fact, dilutive.

Posted Date: 3/30/2013 6:36:03 AM | Location : United States







Related Discussions:- Basic earnings per share, Assignment Help, Ask Question on Basic earnings per share, Get Answer, Expert's Help, Basic earnings per share Discussions

Write discussion on Basic earnings per share
Your posts are moderated
Related Questions
Logan Corporation issued $800,000 of 8% bonds on October 1, 2006, due on October 1, 2011. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to y

Economic Order Quality or EOQ Define the model and the three methods of computing the EOQ. 1. Assumptions of the model. Illustration The given information was extra

USES O F CVP ANALYSIS 1. .It allows preparation of flexible budgets. 2. It provides help in forecasting accurate profit. 3. It aids in formulating price policy. 4

Material Price Variance (MPV) This may be described as the difference amoung the actual price and the standard price of the materials consumed. MPV = Actual quantity used (S

Amanda Deal, president of XYZ, had recently finished an arduous round of meetings with her financial staff". Those meetings dealt with the details necessary to produce an accurate

Pecos Canyon Winery is a small vineyard/winery located in the Big Bend area of West Texas. The initial cabernet grape vines were planted in the spring of 2004 with the first wine p

difference between diffrential cost and marginal cost

1) A) In a competitive market place (pure competition) is it possible to continually sell your product at a price above the average cost of production?  Why or why not? B) Why d

Winston Duff is planning to borrow $225,000 to purchase a new home. Mr. Duff is considering two fixed-rate financing alternatives offered by Horsepen Creek State Bank. The first

Automotive Products  (AP)  designs, manufactures,  and  sells  automotive  parts.  It  has  3 main operating departments: design, engineering, and production.  1.Design  ñ  the