Find and give one example of a security that can dilute

Reference no: EM132728416

Compaq Ltd has a net income after tax of $2 000 000 for the year ended 30 June 2018. At the beginning of the period Compaq Ltd has 900 000 fully paid-up ordinary shares on issue. On 1 January 2018 Compaq Ltd had issued a further 300 000 fully paid-up ordinary shares at an issue price of $2.00. On 1 March 2018 Compaq Ltd made a one-for-five bonus issue of ordinary shares out of retained earnings. The last sale price of an ordinary share before the bonus issue was $2.50. At the beginning of the current period Compaq Ltd also had 500 000, $1.00, 5% cumulative preference shares on issue. The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. The basic earnings per share for the period ended 30 June 2017 was $1.50 per share.

Required:

Problem a) Calculate the basic EPS amount for 2018.

Problem b) Explain what is diluted EPS. Give one example of a security that can dilute the basic EPS.

Reference no: EM132728416

Questions Cloud

Journalize these transactions for Distance Hardware : Journalize these transactions for Distance Hardware. What kinds of discounts exist in a merchandizing business and what purpose do they serve in a business

Prepare all journal entries relative to the avobe event : Prepare all Journal entries relative to the avobe event on September 10, 2019.Dane In.c sold inventory on September 10, 2019 to a foreign customer for 500,000

Record the full loss and report a negative balance : Record the full loss and report a negative balance in the investment account; continue to apply equity method accounting. Bring the investor investment account

Implementing effective training program : What are the critical steps in planning and implementing an effective training program?

Find and give one example of a security that can dilute : The dividends on the preference shares are not treated. Explain what is diluted EPS. Give one example of a security that can dilute the basic EPS.

Electromagnetic principles and properties : Applications of the physical sciences to Engineering problems - Examine scientific data and apply appropriately using computational methods

The emperor''s new clothes : Does the story "The Emperor's New Clothes" provide a good example of the Abilene paradox? Why or why not?

Compute what is the monthly margin of safety in dollars : If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is (1) the monthly margin of safety in dollars

How to do the journal entry to record the cost of the units : How to do the journal entry to record the cost of the units transferred out of the Mixing Department and into the Finishing Department

User Account

All Pages