Compute for the adjustment factor. 2. Compute the basic earnings per share for 2020.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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JJJ Company provided the following information:

Net income for 2020 11,000,000
Net income for 2021 15,000,000
Net income for 2022 18,000,000
Ordinary shares outstanding during 2020 600,000

On January 1, 2021, the entity granted a rights issue in the ratio of one new share for each 5 outstanding shares or a total of 120,000 shares. The rights are exercisable on March 1, 2021 and the exercise price is P5 per share. The market price of one ordinary share immediately before exercise of rights on March 1, 2021 is P11.

1. Compute for the adjustment factor.

2. Compute the basic earnings per share for 2020.

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