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+--- Thread: Earnings Per Share-Gripping IFRS (/showthread.php?tid=10557)
Earnings Per Share-Gripping IFRS - A.A - 11-01-2011
Salam!Please refer to the following link and answer my queries
http//www.icap.org.pk/userfiles/file/e-student/ifrs2008/chapter23_earningspershare2008.pdf
Example 17Convertible preference shares
I solved Basic EPS correctly but my Diluted EPS calculation was like this
EARNINGSPBT+Finance cost of (20%x100,000x2)=40,000 being dividend given on p.shares liability which is saved if p.shares are converted into ord.shares.As tax rate is not given,we either assume tax rate of 30% or compute the ratio of PAT to PBT to calculate the new Earnings After Tax i.e
[(755,000+40,000)x(405,000/755,000)]/(200,000+100,000)=Rs 1.42/share.
In Gripping's Solution,I don't understand why 45,000 was added back instead of 40,000 and more importantly,where the random figure 5,000 came from.Also,the answer has not taken the impact of tax.Please explain.
Example 18Contingent shares
Radio Limited is a wholly-owned subsidiary of Airport Limited.So,all it's profits will belong to Airport Limited.So why are the earnings of Radio Ltd in 20X5 not added to Airport Ltd's Earnings in EPS calculation?i.e
why aren't earnings=(500M+200M)=700M?
Help will be highly appreciated.