Question

Andy Ltd has 400,000 ordinary shares on issue at 1 July 2019, which is the beginning of its reporting period. On 1 March 2020, it issued a further 300,000 ordinary shares for cash. Required: What is the weighted average number of shares for use in the earnings per share calculation for the year ended 30 June 2020?

Answer 1

The Number of shares as on 1 July 2019

So, Number of share further issued on 1 March 2020

Number of months = 8

So, Total Value = Number of share * Number of month

= 400,000 * 8

= 3200,000

Now, The Number of shares has Increased to 700,000 Shares [ 400,000 + 300,000]

Number of months = 1 March 2020 to 30 June 2020

= 4 Months

Value = Number of Months * Shares

= 4 * 700,000

= 2800,000

So, weighted shares = Total Sum of value / Number of Months

= (3200,000 + 2800,000) / 12

= 60,00,000 /12

= 500,000 Shares

Weighted Shares = 500,000