Doubt in EPS, AS-20

Dear Jk,

Well, The actual point of question here is about 24000 shares which remained un - paid.

As far as i know, partly paid shares should be included in the calculation of Basic EPS to the extent of their Paid - up Value only.

Here are the doubts raised by you.

In the first method we are taking 100/100 for calucating 96,000 shares because at the first instance they were only partly paid up . i.e Rs 50 = 1/2 = 120000/2. In the second instance 96000 shares are now fully paid . Isn't it... so we are taking it as Rs. 100. 

                    Method I

                                     1,20,000/2 * 5/12 = 25,000 ( We are calculating for partly paid shares i.e 60,000 shares only.

                                      96,000 now become fully paid as Rs. 50 was already paid on .01.01.2004 so we take it as Rs. 100 and calculate it for the remaing 7 months.

                                     24,000 shares were already partly paid Rs. 50 so 24,000*50/100*7*12 = 7,000

                 Method II

                                    ( 96,000 + 24,000 ) * 50/100 * 12/12 ) here 24,000 shares which remained un paid were also included

                                     ( 96,000 ) * 50 / 100 * 7 / 12 ) here we take it as Rs. 50 instead of Rs.100 because 96,000 of Rs.50 were already included above. which is calculated for 12 months. Then why should we calculate it again ?

                                     The real point here is we should subtract the 24,000 * 50 /100 * 7* 12 which remained un paild. so your answer will be 88,000 shares in both the cases..

But, the remaining 24,000 shares were not paid up . so they are not entitled to receive any dividend hence they should not be used in calculating EPS.

Give me your maild id  if you have any further doubts

Good luck for your exams

Hello,

Thank you for the reply and detailed explanation. I'm clear with Method II but my doubt in Method I is that :

1. On 1st Apr we've received Rs.50/- for 1,20,000shares so still we need to get only Rs.50/- from 1,20,000shares. That Rs.50/- is received for the period of 5months and rest of the 50 will be taken for 7more months. And again on 1st Sep Rs.50/- was paid for 96,000shares and 24,000 shares were unpaid on that date.

So the calculation should be:

1st April   ---  1,20,000*50/100*5/12   =                   25,000

1st Sep  ----   (1,20,000-24,000)*50/100*7/12   =   28,000

                                                                                         53,000

It should be calculated in the above manner, isn't it ? becauce for all the 1,20,000 shares we have received Rs.50/- and the other 50 we have received on 96,000 shares only.

Now i'm totally confused. It seems as if i've understood but raises many questions in my mind.

Please clarify my doubts.

Thank You..!

See....

You are cosidering the first 50 call only for 5 months. Infact it was with the company for the whole year. So the correct way of calculation would be as per ur method ---

120000*50/100*12/12 = 60000

(120000-24000)*50/100*7/12 = 28000

Total    = 88000.

i.e. first 50 call amount for 12 months on 120000 shares

and second 50 call amount for 7 months on 96000 shares.

Dear Jk,

                What is the paid up value of ( 1,20,000 - 24,000 ) shares as on 1 sep ? It is now Rs. 100 fully paid up isn't it.... Then why you are still considering it as Rs. 50 /-. 

                What is the paid up value of Remaining 24,000 shares as on 1 sep ? It is only Rs.50 . Hence we took it as Rs. 50 and calculated for the remaining 7 months.

Method I          

01.04.2004         1,20,000shares x (50/100) x (5/12)    = 25,000

01.09.2004          96,000 shares x (100/100) x (7/12)    = 56,000 ( Now the paid up value of 96,000 shares is Rs. 100 for the remaining 7 months )

                             24,000shares x (50/100) x (7/12)      = 7,000 ( Rs. 50 remained un paid so we took it as only 50. otherwise it would have been Rs.100 )

 The correct answer is 88,000 only.

Hope you are clear now..

Hi

Thank you Audi and Anandi for your reply. Now I'm clear with the problem in both the methods, thanks a lot for your immediate response.

Good day