Module-6

1.  IAS 33 is required to be used by:

2. When an undertaking presents both consolidated and separate financial statements, the disclosures required by IAS 33 need be presented:

3. Anti-dilution is:

4. Dilution is:

5. Put options on ordinary shares are contracts that give the holder the right to

6. Your preference dividend of $200 million is due. You have reserves of only $40m. You can pay a preference dividend of:

7. Examples of potential ordinary shares are: (i) financial liabilities (or equity instruments), including preference shares, that are convertible into ordinary shares (ii) options and warrants (iii) shares that would be issued upon the satisfaction of conditions resulting from contractual arrangements, such as the purchase of a business, or other assets (iv) treasury shares that have been cancelled

8. Basic earnings per share amounts uses the profit attributable to:

9. Basic earnings per share shall be calculated by dividing the numerator by the number of ordinary shares outstanding (the denominator):

10. The after-tax amount of dividends that is deducted from profit (or loss) is: (i) the after-tax amount of any dividends on non-cumulative preference shares, declared in respect of the period (ii) the after-tax amount of the dividends for cumulative preference shares required for the period, whether or not the dividends have been declared (iii) any original issue discount (or premium) on ‘increasing rate’ preference shares amortised to retained earnings (iv) the amount of any dividends for cumulative preference shares paid (or declared) during the current period, in respect of previous periods (v) the amount of any dividends for ordinary shares paid (or declared) during the current period

11. The time-weighting factor is the number of ……….. that the shares are outstanding:

12. Shares, that will be issued upon the conversion of a mandatorily convertible instrument, are included in the calculation of basic earnings per share from:

13. Contingently-issuable shares are treated as outstanding, and are included in the calculation of basic earnings per share:13. Contingently-issuable shares are treated as outstanding, and are included in the calculation of basic earnings per share:

14. In a capitalisation issue, the number of shares, outstanding before the event, is adjusted for the proportionate change in the number of shares outstanding:

15. A share consolidation is combined with a special dividend. The weighted-average number of shares outstanding for the period in which the combined transaction takes place, is adjusted for the reduction in the number of shares:

16. Diluted earnings per share is required when:

17. For the purpose of calculating diluted earnings per share, an undertaking shall adjust profit by the after-tax effect of: (i) any dividends (or other items) related to dilutive potential shares, deducted in arriving at profit (ii) any interest recognised in the period, related to dilutive potential shares (iii) any other changes in income (or expense), that would result from the conversion of the dilutive potential shares

18. Dilutive potential shares shall be deemed to have been converted into shares:

19. An undertaking uses …………. as the control number, to establish whether potential shares are dilutive, or anti-dilutive:

20. You have some high-interest bonds, which would be anti-dilutive if converted. These will be included in:

21. Options and warrants are dilutive, when they would result in the issue of shares for:

22. Staff share options with fixed terms are treated as options in the calculation of diluted earnings per share. They are treated as outstanding:

23. Contingently-issuable shares: If the conditions are not met when the contingency period expires, restatement of previous periods:

24. When an undertaking has issued a contract that may be settled in shares, or cash at the undertaking’s option, the undertaking shall presume that the contract will be settled in:

25. When an undertaking has issued a contract that may be settled in shares, or cash at the holder’s option, the undertaking shall presume that the contract will be settled in:

26. Contracts, such as purchased put options and purchased call options (i.e. options held by the undertaking on its own shares) are included:

27. If the effect is dilutive, contracts that require the undertaking to repurchase its own shares, such as written put options and forward purchase contracts, are reflected in:

28. Instruments issued by a subsidiary, joint venture or associate that enable their holders to obtain shares in those organisations are included in:

29. All companies which comply with international standards must present EPS figures in the statement of comprehensive income. True or False?

30. A company’s issued share capital throughout an accounting period consists of 500,000 ordinary shares of 20p and 80,000 preference shares of £1. Profit after tax for the period is £320,000 and the preference dividend is £8,000. Basic EPS for the period is:

31. On 1 January 2015, a company’s issued share capital consisted of 120,000 ordinary shares of £1. On 1 May 2015, the company issued another 30,000 ordinary shares and on 1 July 2015 the company issued a further 50,000 shares. Both issues were made at full market price. The weighted average number of shares outstanding during the year to 31 December 2015 was:

32. A company’s profit after tax for the year to 30 June 2016 was £1m. The company’s issued share capital at 1 July 2015 consisted of 2,400,000 ordinary shares of 50p each. A further 300,000 shares were issued at full market price on 1 September 2015. Basic EPS for the year is: Open Hint for Question 4 in a new window.

33. When calculating earnings per share, a bonus issue made during the current accounting period is treated as if it had been made at the beginning of the earliest period for which comparative figures are presented. True or False?

34. A company’s profit after tax for the year to 31 December 2015 was £150,000. The comparative figure for 2014 was £135,000. The company’s issued share capital at 1 January 2014 consisted of 240,000 ordinary shares. A 1 for 4 bonus issue was made on 1 July 2015. There were no other share issues in either year. Basic EPS for 2015 and restated basic EPS for 2014 are:

35. In February 2016, a company makes a 1 for 10 rights issue at 70p per share. The market value of the company’s shares just before this rights issue was £1.25 per share. The theoretical market value per share after the rights issue has been made is:

36. A company’s profit after tax for the year to 31 December 2015 was £275,000. The company’s issued share capital on 1 January 2015 consisted of 350,000 ordinary shares. On 1 April 2015, the company made a 1 for 7 rights issue at £1 per share. The market value of the company’s shares just before this rights issue was £1.40 per share. Basic EPS for 2015 is:

37. Diluted EPS can never exceed basic EPS. True or False?

38. In most cases, share options will not have a dilutive effect on EPS when they are exercised. True or False?

39. Put options on ordinary shares are contracts that give the holder the right to buy ordinary shares at a specified price for a given period.

40. How shall an entity calculate the basic earnings per share?

41. Any excess of the carrying amount of preference shares over the fair value of the consideration paid to settle them is added in calculating profit or loss attributable to ordinary equity holders of the parent entity.

42. When shall ordinary shares issued as a result of the conversion of a debt instrument to ordinary shares be included in the weighted average number of shares?