The following information relates to Rose plc for the year ended 31 December 2019:   £,000 Turnover Operating costs Trading profit Net interest payable   Exceptional charges   Tax expenses Profit after tax 700  476 224      2 222    77 145    66    79 Rose plc had 100,000 ordinary shares of £1 each in issue throughout the year. Rose plc has in issue warrants entitling the holders to subscribe for a total of 50,000 shares in the company. The warrants may be exercised after 31 December 2025 at a price of £1.10 per share. The average fair value of shares was £1.28. The company had paid an ordinary dividend of £15,000 and a preference dividend of £9,000 on preference shares classified as equity.   Required: Calculate the basic EPS for Rose plc for the year ended 31 December 2019, in accordance with best accounting practice. Calculate the diluted EPS figure, to be disclosed in the statutory accounts of Rose plc in respect of the year ended 31 December 2019. Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure to the shareholders.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter16: Retained Earnings And Earnings Per Share
Section: Chapter Questions
Problem 24P: Frost Company has accumulated the following information relevant to its 2019 earningsper share. 1....
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The following information relates to Rose plc for the year ended 31 December 2019:

 

£,000

Turnover

Operating costs

Trading profit

Net interest payable

 

Exceptional charges

 

Tax expenses

Profit after tax

700

 476

224

     2

222

   77

145

   66

   79

Rose plc had 100,000 ordinary shares of £1 each in issue throughout the year. Rose plc has in issue warrants entitling the holders to subscribe for a total of 50,000 shares in the company. The warrants may be exercised after 31 December 2025 at a price of £1.10 per share. The average fair value of shares was £1.28. The company had paid an ordinary dividend of £15,000 and a preference dividend of £9,000 on preference shares classified as equity.

 

Required:

  • Calculate the basic EPS for Rose plc for the year ended 31 December 2019, in accordance with best accounting practice.
  • Calculate the diluted EPS figure, to be disclosed in the statutory accounts of Rose plc in respect of the year ended 31 December 2019.
  • Briefly comment on the need to disclose a diluted EPS figure and on the relevance of this figure to the shareholders.
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