$($a$)$ Below is an extract from the Statement of Financial Position of Tennis Cruise Liners plc at $31$ December $2017.$

Statement of Financial Position

Equity $$

Ordinary Shares $1,800,000$

Retained Earnings $900,000$

$2,700,000$

Non$-$Current Liabilities

$6\%$ Convertible Bonds $1,100,000$

Convertible Preference Shares $600,000$

$1,700,000$

Additional information:

$1.$ The company reported an operating profit of $982,000.$

$2.$ The nominal value of an ordinary share is $1$ and the average market value is $2\mathrm{.}60.$

$3.$ The employees hold $520,000$ share options, which have an exercise price of $2\mathrm{.}00.$

$4.$ A dividend of $7\%$ is payable on the convertible preference shares and the conversion

terms are one ordinary share for every four preferences shares hold.

$5.$ The conversion terms for the convertible bonds are $2,000$ ordinary shares for each

$2,500$ of convertible bonds.

$6.$ Tennis Cruise Liners plc pays tax at a rate of $12\mathrm{.}5\%.$

Required

$($i$)$ Calculate the basic Earnings Per Share of Tennis Cruise Liners plc for the year

ended $31$ December $2017.$

$($ii$)$ Calculate the Diluted Earnings Per Share of Tennis Cruise Liners plc for the year

Ended $31$ December $2017$

$($b$)$ A trainee accountant of a subsidiary company of Tennis Cruise Liners plc is seeking advice on how to account for a rights issue per IAS $33$ Earnings per Share.

On $31$ December $2016$ and $2017$ Souvenirs Galore plc had a capital structure consisting of:

$700,0001$ ordinary shares; and

$86,00013\%$ preference shares.

Net profit for year ended $31$ December $2017$ was $3,500,000.$

Net profit for year ended $31$ December $2016$ was $2,754,000.$

On $31$ March $2017,$ Souvenirs Galore plc announced a rights issue with the following details:

Rights: $3$ new shares for each $5$ held

Issue price: $2\mathrm{.}20$

The market value of one share in Souvenirs Galore plc immediately prior to the

rights issue was $4\mathrm{.}10$

Required

$($i$)$ Explain, using calculations how the basic earnings per share of Souvenirs

Galore plc will be calculated.