BI Plc Has 7 000 000 Ordinary Shares on Issue

question 31

Multiple Choice

BI Plc has 7 000 000 ordinary shares on issue at the beginning of the year,1 July 2014.These shares were issued at €4.50 each and have a current market value of €8.00.On 1 September 2014,BI Plc bought back 500 000 ordinary shares originally issued at €4.50 for €6.50 each.On 1 December 2014,1 000 000 shares were issued fully paid up at the current market value of these shares.Also during the period,800 000 partly paid-up ordinary shares were issued.They were issued on 1 February 2015 at an issue price of €7.20.These shares were partly paid to €4.50.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price. BI Plc has 1 000 000,€1.00 preference shares that provide non-cumulative dividends at a rate of 10%.The dividends were not paid this period.
For the year ended 30 June 2014,the net loss after tax was €1 000 000.
What are the basic earnings per share for BI Plc for the year ended 30 June 2015?

• A)none required because the company made a loss
• B)($0.15)
• C)$0.20
• D)($0.14)

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Definitions:

Conservatism

An accounting principle that requires potential expenses and liabilities to be recognized immediately, but revenue only when it is ensured.

Chapter 7 Bankruptcy

A type of bankruptcy that involves the liquidation of a debtor's assets to repay creditors, under the U.S. Bankruptcy Code.

Free Assets

Assets that are not encumbered by any liens or claims, available to be used or sold freely by the owner.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal.