A. On 1 st July 2020 Boober plc had in issue 65 million ordinary shares (nominal value
Question:
A. On 1st July 2020 Boober plc had in issue 65 million ordinary shares (nominal value 25p per share) and 8 million 6% convertible preference shares (nominal value £1 per share), each convertible into 2 ordinary shares after 1st July 2028.
The company's reported basic earnings per share for the year to 30th June 2020 was 9.1p per share.
The directors made a 1 for 5 rights issue on 1st January 2021 when the market price per share was 150p. This issue, at a rights price of 120p, was taken up in full.
On 1st April 2021 they made a further issue of 2.2m shares at the full market price of £1.80 per share. The issue was fully subscribed and fully paid.
The reported profit for the year ended 30th June 2021 after tax at 30% was £7.32m. Preference dividends are treated as a finance cost in accordance with IAS32.
- Calculate Boober plc's basic earnings per share for the year ended 30th June 2021 and any comparative figures
- Calculate the company’s diluted earnings per share for the year ended 30th June 2021.
- Explain your treatment of the rights issue above AND how this enhances the quality of the financial statements. [140 WORDS]
B. Mokey Merchants Ltd also has a reporting date of 30th June each year.
On 1st July 2018 Mokey Merchants Ltd acquired a piece of machinery for £60,000. The machine was entitled to capital allowances of 40% in the year of acquisition and 30% annually thereafter. It had an estimated useful economic life of 6 years and no residual value.
Following a change in the product mix, the machine was sold on 30th June 2021 for £30,000.
Pre-tax profit for the year ended 30th June 2021 (after adjustment for depreciation) is £382,000.
Mokey Merchants Ltd had no deferred tax balances at 1st July 2018 and no other capital transactions in the 3 years to 30th June 2021.
The applicable current tax rate in the year to 30th June 2021 is 30%.
Required:
Prepare extracts of the income statement and statement of financial position for Mokey Merchants Ltd for the year ended 30th June 2021 showing the tax, pre-tax profit and after-tax profit.
