Tutorial 7 Jane Lazar and Huang (4th Edition)Chapter 35-MFRS133
Question 2 page 694 Given below is the extract of statement of profit or loss of Ayer Bhd, a listed company. Profit form the year ended 30 June x5 RM Profit before taxation
700,000
Taxation – 30%
(200,000) 500,000
Dividends paid – ordinary shares - preference shares
100,000 35,000
The following information is also provided: a. Issued Issued share share capit capital al on 1 July July x4 compr comprise isess 2 millio million n ord ordina inary ry shares and RM500,000 7% preference shares. b. On 1 July July x4, x4, RM50 RM500,0 0,000 00 10% 10% con conver vertib tible le debe debentu nture ress (con (conve verti rtibl ble e into 200 ordinary shares per RM100 debenture) were outstanding. c. Chang Changes es in capit capital al struc structur ture e duri during ng the year year ended ended 30 June June x5 x5 are are as follows: follows: a. b.
d.
On 1 Octo October ber x4, a righ rights ts issu issue e of ordin ordinary ary share sharess on on a one-f one-foror-fo four ur basis at 80 sen (market price before the issue was RM1) was made. The The bas basic ic EPS EPS for for the the year year ende ended d 30 30 Jun June e x4 x4 was was 18 sen. sen.
Tax rate is 30%.
Required: a. Compute the company’s basic EPS for the current year and comparative figure for the previous year. b. Comp Comput ute e the the dilu dilute ted d EPS EPS for for the the cur curre ren nt year year..
(a)
Profit = profit after preference shareholders 500,000
Basic EPS x5
–
35,000 = 19.4 sen
(2m x 3/12 x 1/0.96*) + (2.5m x 9/12) = 465,000 2,395,833
Theoretical ex-right price (2mil x RM1) + (0.5mil x RM0.80)= RM2.4mil 2.4mil / 2.5mil = 0.96 •
•
or Number of share
x
Price per share (RM)
=
Total (RM)
4
1
4
1
0.80
0.80
5
4.8
Restate Restate EPS x4
18 sen x 0.96 1
(b) Diluted EPS for current year
Diluted EPS presented should be the ‘worst’ possible.
= 17.3 sen
Diluted EPS x5 Profit after preference preference divd + interest after after tax (no need to pay since it is convert to OSC) Number of share (current after add right issue) + new OSC (after covert from loan/pref loan/pref.share) .share) •
•
Diluted EPS x5 =
465,000 + (10% x 500,000 x 70%) 2,395,833 + (500,000 x 200/100)
= 14.7 sen
Question 3 page 694
Given below is the income summary for Travel Bhd for the years ended 31 December x6 and x5:
X6
X5
RM’000
RM’000
500
450
Taxation
(150)
(140)
Ordinary dividends
(50)
(50)
Profit before taxation
The following information is relevant: a. On 1 Janu January ary x5, the issue issued d share share capit capital al consi consist sted ed of 2 milli million on ordinary shares. b. On 1 July July x5, 1 milli million on ordin ordinary ary share sharess wer were e issue issued d for for a fair fair consideration of RM1.5 million. c. On 1 Janu January ary x5, optio options ns were were gran grante ted d to to empl employ oyees ees to subscr subscribe ibe for 500,000 ordinary shares in Travel Bhd for RM400,000. d. The ave avera rage ge mark market et pric price e of one one ord ordina inary ry shar share e of Tra Trave vell Bhd for for the year ended 31 December x5 and x6 was RM1 and RM1.20 each, respectively. e. On 1 April April x6, the compa company ny bough boughtt back back 500, 500,000 000 ordina ordinary ry share shares. s. f. The The net net loss loss fro from m disc discon onti tinu nued ed oper operat atio ions ns for for the the year year x6 x6 was was RM100,000. From the information given, you are required to calculated the basic EPS and diluted EPS for years x5 and x6.
Basic EPS x5 =
450,000 – 140,000 140,000 ___ (2m x 6/12) + (3m x 6/12)
= 12.4 sen
Diluted EPS x5 =
450,000 – 140,000 140,000 ___ 2.5m + (500,000 x 0.2/1)*
= 11.92 sen
*Share assume to be issued = 500,000 OSC
= 500,000 x (RM400k ÷ 500K) / RM1 =500,000 x RM0.80 /1 =400,000 Therefore, increase in shares outstanding = 500,000 – 400,000 = 100,000 Or (based on working in *)
Basic EPS x6 =
500,000 - 150,000_____ (3m x 3/12) + (2.5m x 9/12) 350,000 2.625m
Basic EPS x6 = (Continuing operation)
= 13.33 sen
600,000 -150,000 ____ (3m x 3/12) + (2.5m x 9/12) 450,000 2.625m
= 17.1 sen
Diluted EPS x6 =
500,000 – 150,000 150,000 ___ 2.625m + (500,000 x 0.4/1.2)
= 12.54 sen
Diluted EPS x6 = (Continuing operation)
600,000 – 150,000 150,000 _______ 2.625m + (500,000 x 0.4/1.2)
= 16.12 sen
Question 7 page 697 •
Refer from textbook
Basic EPS x3
Basic EPS x4
10m/40m = 25 sen
14.8m ______________ (40m +10m* x 12/12) + ([8m + 2m**] x 9/12)
= 25.74 sen
*40m x 1/4 = 10m (bonus share need to be considering from the beginning of the year) **8m x 1/4 = 2m Since bonus issue in on 1 Oct x4, new issue of 8mil also need to take into consideration . Restate EPS x3
25 sen x 40m/50m = 20 sen
Basic EPS x5
16.8m__________ (60m x 6/12 x 4.8/4*) + (84m** x 6/12) =
16.8m 36m +42m
= 21.54 sen
*Theoretical ex-right price Number of share
x
Price per share (RM)
=
Total (RM)
5
4.8
24
2
2
4
7
28 RM28 ÷ 7 = RM4
**Right issue (1 July) = 2/5 x 60mil = 24mil Total share = 60mil + 24mil = 84mil
Restate Restat e Basic EPS x4
Diluted EPS x5
25.74 sen x
4 sen 4.80
= 21.45
16.8m______ 78m + (24m x 1.5/4.5)* =
16.8m 86 m
= 19.53 sen
*Share assume to be issued = 24,000,000 OSC = 24,000,000 x RM3 / RM4.5 =16,000,000 Therefore, increase in shares outstanding = 24,000,000 – 16,000,000 = 8,000,000 Or (based on working in *)
Basic EPS x6
Diluted EPS x6
10.8m 84m
= 12.86 sen
10.8m + 2.4m* 84m + (24m x 2/5)** + 20m***
= 11.62 sen
*interest saving after tax 8% x RM40mil x 75% = 2.4mil
**Share assume to be issued = 24,000,000 OSC = 24,000,000 x RM3 / RM5 =14,400,000 Therefore, increase in shares outstanding = 24,000,000 – 14,400,000 = 9,600,000 Or (based on working in *)
***convertible loan to stock RM40mil ÷ RM100 x 50 OSC = 20mil OSC
