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How the repurchase of shares on march should be accounted

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Reference no: EM132546033

The following information relates to Entity 4 as at 1 January 2019.

                                       2019

                                                     £

£1 ordinary shares capital     100,000

Share premium                    50,000

Retained profit                   200,000

On 1 March, Entity 4 repurchased 10,000 ordinary shares (originally issued at £1.50) for £2 each. These shares were cancelled from the share capital immediately. On 1 July, Entity 4 issued one share for every four shares in issue for £1.50 each.

Question (i) Show clearly how the repurchase of shares on 1 March 2019 should be accounted for.

Question (ii) Show clearly how the right issues on 1 July 2019 should be accounted for.

Question (iii) Suppose the profit after tax for 2019 was £75,000. What is the basic EPS for 2019?

Reference no: EM132546033

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