Knowee
Questions
Features
Study Tools

Hanah Co. has $2.5 million in equity share capital (50 cents per share) outstanding as of October 1, 20X4. The year ended September 30, 20X5, saw no new shares issued; nonetheless, as of that date, there were outstanding share options, which had the dilutive effect of issuing 1.2 million shares without consideration. For the year that concluded on September 30, 20X5, Hanah's profit after taxes was $1,550,000. What is Hanah's diluted earnings per share for the year ending September 30, 20X5, as per IAS 33 Earnings per Share?a.$0.25b.$0.42c.$0.31d.$0.41

Question

Hanah Co. has 2.5millioninequitysharecapital(50centspershare)outstandingasofOctober1,20X4. TheyearendedSeptember30,20X5,sawnonewsharesissued;nonetheless,asofthatdate,therewereoutstandingshareoptions,whichhadthedilutiveeffectofissuing1.2millionshareswithoutconsideration. FortheyearthatconcludedonSeptember30,20X5,Hanah′sprofitaftertaxeswas2.5 million in equity share capital (50 cents per share) outstanding as of October 1, 20X4. The year ended September 30, 20X5, saw no new shares issued; nonetheless, as of that date, there were outstanding share options, which had the dilutive effect of issuing 1.2 million shares without consideration. For the year that concluded on September 30, 20X5, Hanah's profit after taxes was 1,550,000. What is Hanah's diluted earnings per share for the year ending September 30, 20X5, as per IAS 33 Earnings per Share?a.0.25b.0.25b.0.42c.0.31d.0.31d.0.41

...expand
🧐 Not the exact question you are looking for?Go ask a question

Solution 1

To calculate the diluted earnings per share (EPS), we first need to determine the total number of shares, taking into account the dilutive effect of the outstanding share options.

  1. Hanah Co. has 2.5millioninequitysharecapital,witheachsharevaluedat50cents.Thismeansthereare5millionsharesoutstanding(2.5 million in equity share capital, with each share valued at 50 cents. This means there are 5 million shares outstanding (2.5 million / $0.50 per share).

  2. The outstanding share options had the dilutive effect of issuing an additional 1.2 million shares. So, we add this to the existing number of shares to get a total of 6.2 million shares (5 million + 1.2 million).

  3. Hanah's profit after taxes for the year was $1,550,000.

  4. To calculate the diluted EPS, we divide the profit after taxes by the total number of shares. So, 1,550,000/6.2millionshares=1,550,000 / 6.2 million shares = 0.25 per share.

So, the diluted earnings per share for the year ending September 30, 20X5, as per IAS 33 Earnings per Share is 0.25.Therefore,theanswerisa.0.25. Therefore, the answer is a. 0.25.

This problem has been solved

Solution 2

To calculate the diluted earnings per share (EPS), we first need to determine the total number of shares, taking into account the dilutive effect of the outstanding share options.

  1. Hanah Co. has 2.5millioninequitysharecapital,witheachsharevaluedat50cents.Thismeansthereare5millionsharesoutstanding(2.5 million in equity share capital, with each share valued at 50 cents. This means there are 5 million shares outstanding (2.5 million / $0.50 per share).

  2. The outstanding share options had the dilutive effect of issuing an additional 1.2 million shares. So, we add this to the existing number of shares to get a total of 6.2 million shares (5 million + 1.2 million).

  3. Hanah's profit after taxes for the year was $1,550,000.

  4. To calculate the diluted EPS, we divide the profit after taxes by the total number of shares. So, 1,550,000/6.2millionshares=1,550,000 / 6.2 million shares = 0.25 per share.

So, the diluted earnings per share for the year ending September 30, 20X5, as per IAS 33 Earnings per Share is $0.25 (option a).

This problem has been solved

Similar Questions

Isco’s financial statements show a profit for the year to 31 December 20X5 of $2 million. On 1 January 20X5 Isco had 4 million shares in issue and made no further issues of shares during the year. At 31 December 20X5 there were 1 million outstanding options to buy shares at $3 each. For the year to 31 December 20X5, the average market value of Isco’s shares was $5. What is Isco’s diluted earnings per share for the year ended 31 December 20X5? A 50.0¢ B 28.6¢ C 45.5¢ D 43.4¢

On 1 January 20X4, Sam Co had 3 million ordinary shares in issue. On 1 June 20X4, SamCo made a 1 for 3 bonus issue. On 30 September 20X4, Sam Co issued a further 1 millionshares at full market price. Sam Co had profits attributable to ordinary equity holders of $2million for the year ended 31 December 20X4.What is the basic earnings per share figure for the year ended 31 December 20X4, accordingto IAS 33 Earnings Per Share?A 47.1¢B 52.2¢C 56.8¢D 50.0¢

Information concerning common stock as of November 30, the end of the company’s current fiscal year, is presented below.Number of shares outstanding460,000Par value per share$  5.00Dividends paid per share in current year6.00Market price per share54.00Basic earnings per share18.00Diluted earnings per share12.00The price-earnings ratio for the common stock is

PEFERED SHARES: 3000 SHARESAUTHORIZZED SHARES: 18000 SHARESISSUED SHARES: 15000 SHARESTOTAL DIVDEND FOR THE YEAR: Php7500000TOTAL DIVIEND FOR PREFFERED SHARES IS 35% OT THE TOTAL DIVIDENDS FOR THE YEARHOW MUCH IS THE EARNINGS PER SHARE?

PEFERED SHARES: 1980 SHARESAUTHORIZZED SHARES: 12550 SHARESUNISSUED SHARES: 2500 SHARESTOTAL DIVDEND FOR THE YEAR: Php 6,500,250TOTAL DIVIEND FOR PREFFERED SHARES IS 20% OT THE TOTAL DIVIDENDS FOR THE YEARHOW MUCH IS THE EARNINGS PER SHARE?

1/1

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.