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Deloitte. IFRS Bookmarks Bookmarks VIEW ADD QuickindKeyword VIEW ADD Message Centre? Question 1 Needham Plc entered a contract on 1 November 2009 to pay Kadee Inc for transporting goods. Payment can be made in 400,000 cash or 200,000 ordinary shares, at Needham's option. Kadee shipped the goods on 15 December and was paid on 30 December in cash. Needham's 2009 profits were 2,942,000 Needham has 1,000,000 €1 ordinary shares and 500,000 €1 7% preference shares classified as equity Average market ordinary share price during 2009 was €6.50. Tax rate is 25% Tools What are Needham's diluted earnings per share in 2009? Select one option and click Submit. Background Coach €2.87 O 2.88 €2.89 €2.90 O 2.92 €2.94 Examples Reference Clue Calculator Word SUBMIT Excel EXIT HELP PRINT ACTION PLANNER 2/12

Explanation / Answer

Ordinary share capital - 1,000,000 @ € 1 per share

7% Preference shares - 500,000 @ € 1 per share

Income for the Year 2009 is € 2,942,000

Dividend to be paid on preference shares

= 500,000 share X € 1 X 7%

= € 35,0000

Net income available for Ordinary share holders

= ( Net income for the Year - Dividend paid to preference share holders ) / No. of Ordinary Shares

= ( € 2,942,000 - € 35,000 ) / 1,000,000

= ( € 2,907,000 ) / 1,000,000

= € 2.90

So, Answer is € 2.90

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