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  • Model Solution-03:: Calculation of Factor

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    Babu babu
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    The document provides a calculation of an adjustment factor to account for a rights issue and calculates basic earnings per share for years 20X2 and 20X1. It first calculates the theoretical ex-rights value per share and adjustment factor. It then uses the adjustment factor to calculate basic EPS for 20X2 and 20X1 by dividing net income by the weighted average number of shares outstanding during each period.

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    The document provides a calculation of an adjustment factor to account for a rights issue and calculates basic earnings per share for years 20X2 and 20X1. It first calculates the theoretical ex-rights value per share and adjustment factor. It then uses the adjustment factor to calculate basic EPS for 20X2 and 20X1 by dividing net income by the weighted average number of shares outstanding during each period.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    6 views1 page

    Model Solution-03:: Calculation of Factor

    Uploaded by

    Babu babu
    The document provides a calculation of an adjustment factor to account for a rights issue and calculates basic earnings per share for years 20X2 and 20X1. It first calculates the theoretical ex-rights value per share and adjustment factor. It then uses the adjustment factor to calculate basic EPS for 20X2 and 20X1 by dividing net income by the weighted average number of shares outstanding during each period.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 1

    Model Solution-03:

    Calculation of factor:

    (800,000 × $10 + 160,000 × $6)


     Theoretical ex-rights value per share is = -----------------------------------------
    960,000
    = $9.33
    $10.00
     Adjustment factor is = ----------
    9.33

    = 1.07
    3,500
     Basic earnings per share 20X2: = ------------------------------------------------
    [800 × 3/12 × 1.07 + (960 × 9/12)]

    = $3.75
    2,100
     Basic earnings per share 20X1: = ---------------------------
    800 × 1.07
    = $2.45

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