306 / 488
Chapter
26 /
Earnings Per Share (lAS 33)
297
MULTIPLE-CHOICE QUESTIONS
1.
Entity A has an ordinary "A" class, nonvoting
share , which is entitled to a fixed dividend of 6% per
ann um. The "A" class ordinary share will
(a) Be included in the "per share" calculation
after adjustment for the fixed dividend.
(b) Be included in the "per share" calc ulation
for EPS without adjustment for the fixed
dividend .
(c) Not be included in the "per share" calcula–
tion for EPS.
(d) Be included in the calculation of diluted
EPS.
Answer: (c)
2. Earnings per share is calculated before account–
ina for which of the following items?
"' (a) Preference dividend for the period.
(b) Ordinary dividend .
(c) Taxation.
(d) Minorit y interest.
Answer: (b)
3. Ordinary shares issued as part of a business com–
bination are included in the EPS calculation in the
case of the "purchase" method from
(a) The beginning of the accounting period.
(b) The date of acquisition.
(c) The end of the accounting period.
(d) The midpoint of the accounting year.
Answer: (b)
4. When an enterprise makes a bonus issue/stock
split/stock dividend or a rights issue, then .
(a) The previous year's EPS is not adjusted for
the issue.
(b) The previous year' s EPS is adjusted for the
Issue.
(c) Only a note of the effect on the previous
year ' s EPS is made.
(d) Only the diluted EPS for the previous year is
adjusted.
Answe r : (b)
5. If a stock option is converted on March 31,
20X l, then
(a) The potential ordinary shares (stock option)
are included in diluted EPS up to March 3 I,
20X1, and in basic EPS from the date con–
verted to the year-end (both weighted ac–
cording ly).
(b) The ordinary shares are not included in the
diluted EPS calculati on but are included in
basic EPS.
(c) The ordinary shares are not included in the
basic EPS but are included in diluted EPS.
(d) The effects of the stock option are included
only in previous year's EPS calculation.
Answer : (a)
6. In calculating whether potential ordinary shares
are dilutive, the profit figure used as the "co ntrol
number" is
(a) Net profit after taxation (including discon–
tinued operations).
(b) Net profit from continuing oper ations.
(c) Net profit before tax (including discontinued
operations).
(d) Retained profit for the year after dividend s.
Answe r : (b)
7.
Potent ial ordinary shares issued by a subsidiary
should be included in the diluted EPS calculation as
they could potentia lly have an impact on the net profit
for the period and the number of shares to be included
in the calculation.
(a) True
(b) False
Answe r : (a )
8. An enterprise need disclose diluted EPS only if it
differs from basic EPS by a material amount.
(a) True
(b) False
Answer : (b)
9. If a bonus issue occurs between the year-end and
the date that the financ ial statements are authorized,
then
(a) EPS both for the current and the previo us
year are adjusted.
(b) EPS for the current year only is adjusted.
(c) No adj ustment is made to EPS.
(d) Diluted EPS only is adj usted.
Answer : (a)
10. If a new issue of shares for cash is made between
the year-end and the date that the financial statements
are authorized, then
(a) EPS for both the current and the previous
year are adjusted.
(b) EPS for the current year only is adj usted.
(c) No adj ustment is made to EPS .
(d) Diluted EPS only is adj usted.
Answer: (c)
11.
The weighted average number of shares out–
standing during the period for all periods (other than
the conversion of potential ordinary shares) shall be
adj usted for
(a) Any change in the number of ordinary
shares without a change in resource s.
(b) Any prior-year adj ustment.
(c) Any new issue of shares for cash.
(d) Any convertib le instruments settled in cash.
Answer : (a)