PAS 33-Earnings Per Share PAS 33-Earnings Per Share

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PAS 33-Earnings Per Share
Accountancy (Ramon Magsaysay Technological University)
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CHAPTER 31
PAS 33- EARNINGS PER SHARE
BASIC EARNINGS PER SHARE
Simple Problems
PROBLEM 31-1 (AICPA Adapted)
On December 31, 2019 and 2018, Gow Company had 100,000 ordinary
shares and 10,000 cumulative preference shares of 5%, P100 par value.
No dividends were declared on either the preference or ordinary shares
in 2019 or 2018. Net income for the current year was P900,000. What
amount should be reported as basic earnings per share?
A. 8.50
B. 9.50
C. 9.00
D. 5.00
Answer. A. 8.50
Preference share capital (10,000 x P100) 1,000,000
Net income. 900,000

Preference dividends (1,000,000 x 5%) (50,000)
Net income to ordinary shares. 850,000
BASIC EARNINGS PER SHARE (850,000/100,000 ordinary shares) P8.50
Whether cumulative or noncumulative, only one year preference

dividend is deducted from net income.
If cumulative, the preference dividend is deducted regardless of
declaration.
If noncumulative, the preference dividend is deducted only when
declared.
PROBLEM 31-2(AICPA Adapted)

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Royal Company reported the ff. capital structure on Jan. 1, 2019:
Shares issued and outstanding

Ordinary share capital 200,000
Preference share capital. 50,000
On October 1, 2019, the entity issued a 10% share dividends on ordinary

shares and declared the annual cash dividend of P200,000 on preference
shares. The preference shares are noncumulative, nonparticipating and
nonconvertible.
Net income for the year ended December 31, 2019 was P1,920,000.
What amount should be reported as basic earnings per share?
A. 8.20
B. 8.72
C. 9.36
D. 7.82
Answer: D. 7.82
Ordinary shares - January 1, 2019 200,000

Share dividends on October 1, 2019(10% x 200,000) 20,000
Total ordinary share outstanding 220,000
Net income 1,920,000

Preference dividend (200,000)
Net income to ordinary shares 1,720,000
BASIC EARNINGS PER SHARE (1,720,000 / 220,000) P7.82
Note that the preference shares are noncumulative but the annual
preference dividend is deducted from net income because it was declared
during the year.
Otherwise, the annual preference dividend is ignored in the absence of
declaration.
Ute Company had the following capital structure during 2019:
Preference share capital, P10 par, 4% 250,000

cumulative, 25,000 shares issued and
outstanding
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Ordinary share capital, P5 par value, 200,000 1,000,000

shares issued and outstanding
The entity reported net income of P500,000 for the year ended December
31, 2019.
The entity paid no preference dividends during 2018 and paid P16,000
preference dividends during 2019

a. 2.42
b. 2.45
c. 2.48
d. 2.50
Answer: b. 2.45
Net income 500,000

Preference dividend for 1 year(250,000 x 4%) (10,000)
Net income to ordinary shares 490,000
BASIC EARNINGS PER SHARE (490,000/200,000) P2.45
PROBLEM 31-4 (IFRS)

Smart Company reported a profit before tax of P5,800,000 and income tax expense
of P1,500,000 for the current year.
The entity paid during the year an ordinary dividend of P400,000 and a preference
dividend of P500,000 on the preference shares.
The entity had a P1,000,000 of P5 par value ordinary shares in issue.
1. What amount should be reported as basic earnings per share if the

preference shares are redeemable?
A. 21.50
B. 19.00
C. 8.60
D. 7.60

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Answer: A. 21.50
Ordinary share outstanding (1,000,000/5) 200,000
BASIC EARNINGS PER SHARE (4,300,000/200,000) P21.50
The preference dividend is ignored because the preference shares are redeemable
and considered as financial liability.
The preference dividend of P500,000 is already deducted from the net income as a
finance cost.
2. What amount should be reported as basic earnings per share if the

preference shares are nonredeemable?
A. 29.00
B. 19.00
C. 21.50
D. 16.50
Answer: B. 19.00
Net income to ordinary share 3,800,000
BASIC EPS (3,800,000/200,000) P19.00

In the absence of any contrary statements, the preference shares are
nonredeemable.
PROBLEM 31-5 (IAA)
On January 1, 2019, Pink Company had 200,000 ordinary shares and

100,000 4% P100 par value cumulative preference share outstanding.
No dividends were declared on either the preference or ordinary shares
in 2018 and 2019.
On December 31, 2019, the entity declared a 100% share dividend on
ordinary shares.
Net income for 2019 was P7,500,000.
What amount should be recorded as basic earnings per share?

A. 35.50
B. 37.50
C. 17.75
D. 18.75

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Answer: C. 17.75
Preference dividend (4% x 10,000,000) ( 400,000)
Divided by ordinary shares 400,000
BASIC EARNINGS PER SHARE P 17.75
Original ordinary shares 200,000

Share dividend (100%) 200,000
Total ordinary shares 400,000
The share split should be retroactively applied to the earliest period

presented.
Note also that the share split occurred prior to the issuance of the
financial statements.
Otherwise, if the share split occurred after the issuance of the financial
statements, the share split is ignored.
PROBLEM 31-6 (IAA)
Laguna Company reported net income of P15,000,000 for the current
year. The entity showed the following shareholder’s equity at year-end:
Preference share capital 10% cumulative, P50 5,000,000

par value, 100,000 shares
Ordinary share capital, P100 par value, 300,000 30,000,000
shares
Share premium 10,000,000
Retained earnings 18,000,000
Treasury ordinary shares, 50,000 at cost 4,000,000

A. 58.00
B. 60.00
C. 73.60
D. 48.33
Answer: a. 58.00
Ordinary Shares issued (30,000,000 / 100 par value) 300,000

Treasury shares ( 50,000)

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Ordinary shares outstanding 250,000

Preference dividend (5,000,000 x 10%) ( 500,000)
BASIC EPS(14,500,000 / 250,000) P58.00
Note that the numerator is net income reflecting all items including in
profit or loss, such as casualty cost.
PROBLEM 31-7 (IFRS)

On January 1, 2019, Sabina Company had ordinary share capital
outstanding of P100 par value, 200,000 shares or a total par value of
P20,000,000.
On July 1, 2019, a bonus issue was made in the ratio of one additional
ordinary share for each original share. The net income for the current
year was P12,000,000.
A. 30
B. 40
C.60
D. 20
Answer: A. 30
January 1 Ordinary shares 200,000

July 1 Bonus issue 200,000
EARNINGS PER SHARE (12,000,000/400,000) P30.00
The bonus issue is the equivalent of a share dividend.

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PROBLEM 31-8 (Application Guidance PAS 33)

On January 1, 2019, Gina Company had 300,000 ordinary shares
outstanding, P100 par value or a total par value of P30,000,000.
During 2019, the entity issued rights to acquire one ordinary share at
P100 in the ratio of one share for every 5 shares held.
The rights are exercised on March 31, 2019. The market value of each
ordinary share immediately prior to March 31, 2019 was P160.
The net income for 2019 was P6,000,000.
A. 17.14
B. 16.67
C. 18.75
D. 17.39
Answer: A. 17.14
Theoretical Value of Rights
Value of one rights = Market value of share right on – subscription price

Number of rights to purchase one share + 1
Applying the formula for the theoretical value of rights is

= 160-100 / 5+1
=60/6
=P10 per right
Market value of shares-right on 160

Theoretical Value of rights 10
Market value of share ex-right. 150
Adjustment factor 160/150

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The number of ordinary shares outstanding prior to the exercise of the

rights is multiplied by an adjustment factor whose numerator is the
market value of the share rights-on and the denominator is the market
value of the shares ex-right.
Ordinary shares- January 1 300,000

Ordinary shares issued thru exercise of rights on March 60,000
31, 2019 (300,000 /5)
Total ordinary shares on March 31 360,000
January 1 300,000 x 160/150 x 3/12 80,000

March 31 300,000 x 9/12 270,000
Average number of shares 350,000
Basic EPS ( 6,000,000 / 350,000) P17.14

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PROBLEM 31-9 (Application Guidance PAS 33)

On January 1, 2019, Excel Company had 600,000 ordinary shares
outstanding.
During 2019, the entity issued rights to acquire one ordinary share at P10
in the ratio of one new share for every 4 shares outstanding
The rights are exercised on October 1, 2019. The market value of the
ordinary share immediately prior to the rights issue is P35.
The net income for the year is P8,550,000.
A. 11.40
B. 12.00
C. 14.25
D. 13.41
Answer: B. 12.00
Applying the formula for the theoretical value of rights is

= 35-10 / 4+1
=25/5
=P5 per right
Market value of shares-right on 35

Theoretical Value of rights 5
Market value of share ex-right. 30
Adjustment factor 35/30
Ordinary shares- January 1 600,000

Ordinary shares issued thru exercise of rights on October 150,000
1, 2019 (600,000 /4)
Total ordinary shares on October 1 750,000
January 1 600,000 x 35/30 x 9/12 525,000

March 31 750,000 x 3/12 187,500

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Basic EPS ( 8,550,000 / 712,500) P12.00
PROBLEM 31-10 (IAA)

During the current year, Innova Company had outstanding 200,000
ordinary shares and 20,000 cumulative preference shares with a P10 par
share dividend.
The entity had a P3,000,000 net loss for the year. No dividends were
declared or paid.
What amount should be reported as basic loss per share?

A. 15.00
B. 16.00
C. 10.00
D. 10.67
Answer: B. 16.00
Net loss 3,000,000

Preference dividend (20,000 x 10) 200,000
Total loss to ordinary shares 3,200,000
BASIC LOSS PER SHARE (3,200,000/ 200,000) P16.00
The annual preference dividend is added to the net loss to get the total
loss attributable to the ordinary shares.
CHAPTER 32

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Basic EARNINGS PER SHARE

Average shares
Jet Company provided the ff. information for the current year:
January 1 Shares outstanding 200,000

April 1 2-for-1 share split 200,000
July 1 Shares issued 100,000
What is the average number of shares?

A. 400,000
B. 450,000
C. 500,000
D. 540,000
Answer: B. 450,000
January 1 200,000 x 2 x 12/12 400,000
July 1 100,000 x 6/12 50,000
450,000
The share split is recognized retroactively, meaning, it is treated as a

change from the date of original shares are issued.
Thus, the balance of 200,000 shares on January 1 would become 400,000
as a result of a 2-for-1 share split.

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Timp Company had the ff. transactions during the year:

January 1 Ordinary shares outstanding 300,000
February 1 Issued a 10% share dividend 30,000
March 1 Issued ordinary shares in a business 90,000
combination
July 1 Issued ordinary shares for cash 80,000
December 1 Ordinary shares outstanding 500,000
What is the weighted average number of shares outstanding?

A. 400,000
B. 442,000
C. 445,000
D. 460,000
Answer: C. 445,000
January 1 300,000x 1.10 x 12/12 330,000
March 1 90,000 x 10/12 75,000
July 1 80,000 x 6/12 40,000
The share dividend is treated as a change from the date of original shares
are issued.
Thus, the balance of 300,000 on January 1 would become 330,000 shares.
PROBLEM 32-3 (IAA)

Sharon Company provided the ff. information in relation to share capital
for the current year:
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January 1 Shares outstanding 1,250,000

April 1 Shares issued 200,000
October 1 Treasury shares purchased 100,000
December 1 Issued a 100% share dividend
What is the amount of weighted average shares?

A. 2,700,000
B. 2,775,000
C. 2,750,000
D. 1,350,000
Answer: C. 2,750,000
January 1 1,250,000 x 200% 2,500,000
April 1 200,000 x 200% x 9/12 300,000
October 1 100,000 x 200% x 3/12 (50,000)
Average number of shares 2,750,000
PROBLEM 32-4 (IAA)

At the beginning of the current year, Nissan Company had 200,000
ordinary shares outstanding. During the current year, the following events
occured:
March 1 2-for-1 share split
June 1 Issued 30,000 additional shares
September 1 20% share dividend
What is the weighted average number of shares outstanding?

A. 276,000
B. 261,000
C. 230,000
D. 256,000
Answer: B. 261,000
January 1 100,000 x 2 x 1.20 x 12/12 240,000
June 1 30,000 x 1.20 x 7/12 21,000
PROBLEM 32-5 (IAA)

Shane Company had 100,000 ordinary shares issued and outstanding at
the beginning of the year.

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During the current year, the entity had the ff. ordinary shares
transactions:
April 1 Issued 30,000 previously unissued shares

May 1 Split the share 2 for 1
June 30 Purchased 10,000 shares for the treasury
July 31 Distributed a 20% share dividend
December 31 Split the share 3 for 1
What is the weighted average number of shares that should be used in

calculating earnings per share?
A. 288,000
B. 864,000
C. 882,000
D. 972,000
Answer: B. 864,000
January 1 100,000 x 2 x 1.20 x 3 x 12/12 720,000

April 1 30,000 x 2 x 1.20 x 3 x 9/12 162,000
June 30 10,000 x 1.20 x 3 x 6/12 (18,000)
864,000
The January 1 balance is adjusted for the 2 for 1 split, 20% share dividend
and 3 for 1 split.
The April 1 issue is adjusted for 2 for 1 split, 20% share dividend and 3 for
1 share split.
The June 30 treasury shares are adjusted for the 20% share dividend and
3 for 1 share split.
PROBLEM 32-6 (IAA)

Helen Company provided the ff. share transactions for the current year:
January 1 Shares outstanding 44,000
February 1 Issued for cash 56,000
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May 1 Acquired treasury shares 25,000

August 1 25% share dividend
September 1 Resold treasury shares 10,000
November 1 Issued 3 for 1 share split
What is the weighted average number of shares for EPS computation?

A. 305,000
B. 307,500
C. 103,750
D. 311,250
Answer: A. 305,000
January 1 44,000 x 1.25 x 3 x 12/12 165,000

February 1 56,000 x 1.25 x 3 x 11/12 192,500
May 1 25,000 x 1.25 x 3 x 8/12 (62,500)
September 1 10,000 x 3 x 4/12 10,000
305,000
The January 1 balance is adjusted for the 25% share dividend and 3 for 1
split.
The February 1 issue is adjusted for 2 for 25% share dividend and 3 for 1
share split.
The May 1 treasury shares are adjusted for the 25% share dividend and 3
for 1 share split.
The September 1 resold of treasury is adjusted for the 3 for 1 split.
PROBLEM 32-7 (IAA)

Wisconsin Company had 250,000 ordinary shares outstanding on January
1, 2019.
During 2019 and 2020, the ff. transactions took place:
2019 March 1 Sold 24,000 shares
July 1 Issued a 20% share dividend
October 1 Sold 16,000 shares
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December 1 Purchased 15,000 shares to be held in

treasury
2020 June 1 3 for 1 share split

September 1 Sold 60,000 shares
1. What is the weighted average number of shares for 2019 to be used in

the earnings per share computation for comparative financial statements
of 2020?
A. 980,250
B. 329,800
C. 984,000
D. 969,000
2. What is the weighted average number of shares for 2020 to be used in

the earnings per share computation for comparative financial statements
of 2020?
A. 1,009,400
B. 1,049,400
C. 1,169,400
D. 989,400
Answer for no. 1- A. 980,250
2019
January 1 250,000 x 1.2 x 3 x 12/12 900,000
March 1 24,000 x 1.2 x 3 x 10/12 72,000
October 1 16,000 x 1.2 x 3/12 12,000
December 1 15,000 x 1.2 x 1/12 (3,750)
980,250
January 1, 2019 250,000

March 1, 2019 24,000
July 1, 2019 (20% x 274,000) 54,800
October 1, 2019 16,000
December 1, 2019 (15,000)
Outstanding shares-December 31, 2019 329,800
Answer for no. 2- A. 1,009,400

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2020
January 1 329,800 x 3 x 12/12 989,400
September 1 60,000 x 4/12 20,000
1,009,400
PROBLEM 32-8
Precise Company had a net income of P15,000,000 for the current year.
The ff. appropriations have not been considered in this amount:
Arrears of cumulative preference divided by 2 years 4,000,000

Ordinary dividends 5,000,000
Preference share premium payable on redemption 1,000,000
Exceptional profit, net of tax 4,000,000

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The entity had 3,000,000 ordinary shares of P1 par value outstanding at

the beginning of the year. The ff. share transactions occured during the
current year:
January 1 Issued at P5 per share, P1 paid to date and 250,000

entitled to participate in dividends to the extent
paid up
April 1 Full market price P3 per share issue 600,000
July 1 Purchase of own shares 400,000

A. 4.85
B. 4.57
C. 3.64
D. 3.94
Answer: A. 4.85
Net income per book 15,000,000

Exceptional profit 4,000,000
Adjusted net income 19,000,000
Preference dividend for the current year (4M/2) (2,000,000)
Preference share premium payable on redemption (1,000,000)
The preference share premium payable on redemption can be considered

as dividend on participating preference share.
January 1 3,000,000 x 12/12 3,000,000

January 1 250,000 x 1/5 x 12/12 50,000
April 1 600,000 x 9/12 450,000
July 1 400,000 x 6/12 (200,000)
Average shares 3,300,000
BASIC EARNINGS PER SHARE 4.85

(16,000,000/3,300,000)

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Strauch Company had one class of ordinary share capital outstanding and
no other securities that are potentially convertible into ordinary shares.
During 2019, 100,000 shares were outstanding.
In 2020, two distributions of additional ordinary shares occured:
April 1- 20,000 treasury shares were sold

July 1- A 2-for-1 share split was issued
The net income for 2020 was P4,485,000 and the net income for 2019
was P3,500,000.

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1. What amount should be reported as basic earnings per share for 2020
in the comparative income statement for 2020?
A. 20.50
B. 19.50
C. 22.42
D. 18.69
in the comparative income statement for 2020?
A. 35.00
B. 17.50
C. 15.22
D. 14.28
Answer for no.1- B. 19.50

January 1, 2020 200,000 x 12/12 200,000
April 1, 2020 20,000 x 2 x 9/12 30,000
Average Shares 230,000
2020 Basic Earnings Per Share (4,485,000/230,000) 19.50
Answer for no.2- B.17.50

Dec 31, 2019 Balance 100,000
July 1, 2020 2-for-1 share split 100,000
Total ordinary shares-Dec.31,2019 200,000
2019 Basic Earnings Per Share(3,500,000/200,000) 17.50
PROBLEM 32-10 (IAA)

On January 1, 2019, Shane Company had 100,000 ordinary shares
outstanding.
The ff. transactions occured during 2019:
March 1 Reacquired 30,000 shares accounted for as treasury
Sept. 1 Sold all treasury shares
Dec. 1 Sold 66,000 new shares for cash
Dec. 31 Reported a net income of P2,600,000
The ff. transactions occured during 2020

Jan. 15 Declared and issued a 25% share dividend
Dec. 31 Reported a net income of P4,000,000

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for presentation in comparative financial statements on December 31,
2020?
A. 15.88
B. 20.00
C. 20.80
D. 19.90
for presentation in comparative financial statements on December 31,
2020?
A. 24.10
B. 19.28
C. 30.77
D. 32.00
Answer for No.1- B.20.00

2019
Jan. 1 100,000 x 1.25 x 12/12 125,000
March 1 3,000 x 1.25 x 10/12 (3,125)
Sept.1 3,000 x 1.25 x 4/12 1,250
Dec. 1 66,000 x 1.25 x 1/12 6,875
Average shares outstanding 130,000
2019 Basic Earnings Per Share(2,600,000/130,000) 20.00
Answer for no.2- B.19.28

2020
Jan. 1 Outstanding 100,000
March 1 Treasury shares purchased (3,000)
Sept. 1 Resale of treasury shares 3,000
Dec. 1 New issue 66,000
Ordinary shares-Dec.31,2019 166,000
Average share outstanding for 2020(166,000 x 1.25) 207,500

2020 Basic Earnings Per Share (4,000,000/207,500) 19.28
The 25% share dividend declared and issued on January 15, 2020 should
be treated retroactively.

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CHAPTER 33
DILUTED EARNINGS PER SHARE
Convertible Preference Shares
Convertible Bonds Payable

Dunn Company had 200,000 ordinary shares of P20 par value and 20,000
shares of P100 par, 6% cumulative, convertible preference share capital
outstanding for the entire current year. Each preference share is
convertible into 5 ordinary shares.
The net income for the current year was P840,000.
What amount should be reported as diluted earnings per share?

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A. 2.40
B. 2.80
C. 3.60
D. 4.20
Answer: B. 2.80
Ordinary share outstanding 200,000

Potential ordinary shares to be issued for conversion of 100,000
preference shares (20,000 x 5)
Diluted Earnings Per Share (840,000/300,000) 2.80
Under diluted EPS, the annual dividend on the convertible preference

share is no longer deducted from net income because it is assumed that
the preference share is already converted into ordinary shares.

Cox Company had 1,200,000 ordinary shares outstanding on January 1
and December 31, 2019.
In connection with the acquisition of a subsidiary in previous year, the
entity is required to issue 50,000 additional ordinary shares on July 1,
2020 to the former owners of the subsidiary.
The entity paid P200,000 annual preference dividend in 2019 and
reported a net income of P3,400,000 for the current year.
The preference share capital is noncumulative and nonconvertible.
What amount should be reported as diluted earnings per share?
A. 2.83
B. 2.72
C. 2.67
D. 2.56

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Answer: D. 2.56
Ordinary shares outstanding 1,200,000

Potential ordinary shares to be issued in the acquisition of 50,000
subsidiary
Total ordinary shares 1,250,000

Diluted EPS (3,200,000/1,250,000) 2.56
Note that the preference share is nonconvertible and therefore not a

potential ordinary share.
Thus, the preference dividend paid is deducted from net income.

Petrock provide the ff. information at year-end:
2018 2019
Original share capital 90,000 90,000
Convertible preference share capital 10,000 10,000
During 2019, Petrock Company paid dividends of P1.00 per ordinary share
and P2.40 for preference share.
The preference share capital is convertible into 20,000 ordinary shares.
The net income for 2019 was P285,000. The income tax rate is 30%.
1. What amount should be reported as basic earnings per share?

A. 3.17
B. 2.90
C. 3.43
D. 2.85

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2. What amount should be reported as diluted earnings per share?

A. 2.53
B. 2.61
C. 2.90
D. 2.51
Answer to no.1- B.2.90

Net income 285,000
Preference dividend (10,000 x 2.40) (24,000)
Net income-ordinary 261,000
Basic Earnings Per Share (261,000/90,000) 2.90
Answer to no.2- D.2.51

Ordinary share outstanding 90,000
Potential ordinary shares-convertible preference 20,000
Diluted EPS (285,000/110,000) 2.51
PROBLEM 33-4 (IAA)

At the beginning of the current year, Vios Company had 100,000 ordinary
share outstanding.
In addition, the entity had issue 100,000 conertible cumulative 5%
preference share with P100 par at the beginning of the current year.
These preference shares were converted on Sept 1.
Each preference share was converted into 6 ordinary shares.
The preference dividends for the entire year were paid in full before the
conversion.
The entity has no other potentially dilutive securities. Net income for the
current year was P2,000,000.
1. What amount should be reported as basic earnings per share?

A. 16.25
B. 16.67
C. 20.00
D. 19.50
2. What amount should be reported as diluted earnings per share?

A. 12.50

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B. 12.19
C. 16.25
D. 19.50
Answer for no.1- A.16.25

January 1 Outstanding 100,000
September 1 Conversion (10,000 x 6 x 4/12) 20,000
Average share outstanding 120,000
Preference dividend (1,000,000 x 5%) (50,000)
Basic Earnings Per Share (1,950,000/120,000) 16.25

Answer to no.2- A.12.50
January 1 Outstanding 100,000
September 1 Conversion (10,000 x 6) 60,000
Diluted EPS (2,000,000 / 160,000) 12.50

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PAS 33-Earnings Per Share

Accountancy (Ramon Magsaysay Technological University)

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PROBLEM 31-1 (AICPA Adapted)

Preference share capital (10,000 x P100) 1,000,000

Net income. 900,000

BASIC EARNINGS PER SHARE (850,000/100,000 ordinary shares) P8.50

Whether cumulative or noncumulative, only one year preference

PROBLEM 31-2(AICPA Adapted)

Downloaded by Grezhel Pacheco (emgeujel.geujel00@gmail.com)

Royal Company reported the ff. capital structure on Jan. 1, 2019:

Shares issued and outstanding

On October 1, 2019, the entity issued a 10% share dividends on ordinary

Ordinary shares - January 1, 2019 200,000

Net income 1,920,000

BASIC EARNINGS PER SHARE (1,720,000 / 220,000) P7.82

Ute Company had the following capital structure during 2019:

Preference share capital, P10 par, 4% 250,000

Ordinary share capital, P5 par value, 200,000 1,000,000

What amount should be reported as basic earnings per share?

Net income 500,000

BASIC EARNINGS PER SHARE (490,000/200,000) P2.45

PROBLEM 31-4 (IFRS)

1. What amount should be reported as basic earnings per share if the

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Ordinary share outstanding (1,000,000/5) 200,000

BASIC EARNINGS PER SHARE (4,300,000/200,000) P21.50

2. What amount should be reported as basic earnings per share if the

BASIC EPS (3,800,000/200,000) P19.00

PROBLEM 31-5 (IAA)

On January 1, 2019, Pink Company had 200,000 ordinary shares and

Net income for 2019 was P7,500,000.

What amount should be recorded as basic earnings per share?

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Original ordinary shares 200,000

The share split should be retroactively applied to the earliest period

Preference share capital 10% cumulative, P50 5,000,000

What amount should be reported as basic earnings per share?

Ordinary Shares issued (30,000,000 / 100 par value) 300,000

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Ordinary shares outstanding 250,000

Net income 15,000,000

BASIC EPS(14,500,000 / 250,000) P58.00

PROBLEM 31-7 (IFRS)

January 1 Ordinary shares 200,000

EARNINGS PER SHARE (12,000,000/400,000) P30.00

The bonus issue is the equivalent of a share dividend.

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PROBLEM 31-8 (Application Guidance PAS 33)

Theoretical Value of Rights

Value of one rights = Market value of share right on – subscription price

Applying the formula for the theoretical value of rights is

Market value of shares-right on 160

Adjustment factor 160/150

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The number of ordinary shares outstanding prior to the exercise of the

Ordinary shares- January 1 300,000