Question

Elfyd Plc had £1,000,000 50p shares in issue on 1 January 2016. On 1 April 2016,...

Elfyd Plc had £1,000,000 50p shares in issue on 1 January 2016. On 1 April 2016,

Elfyd issued 500,000 shares at their market value of £1.50 each. On 1 August 2016 Elfyd made a bonus issue of 1 share for every 5 in issue.

Calculate the weighted average number of shares to use in Elfyd’s Basic Earnings Per Share calculation for the year ended 31 December 2016?

A       3,750,000

B       3,812,500

C      2,187,500

D      6,625,000

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Answer #1

Solution:

Computation of weighted average outstanding shares
For year ended 2016
Particulars Outstanding shares Period Outstanding Weighted average Nos of shares
Beginning balance 2000000 12 2000000
Additional stock issued on 01.04.2016 500000 9 375000
Total 2500000 2375000
Bonus issue 20% 20%
Weighted average outstanding shares for year ended Dec 31, 2016 (2375000*120%) 3000000 2850000

Note: Answer given in options are not correct

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