According to IAS 33, the numerator for Basic EPS is the profit or loss attributable to ordinary equity holders of the parent entity (Profit After Tax). The problem states profit was $1,100,000 after tax; no adjustments for preference dividends are required.

The denominator is the weighted average number of ordinary shares (WANS) outstanding during the period. Shares issued for cash are included from the date consideration is receivable.

• Opening shares: $10,000,000 \times \frac{12}{12} = 10,000,000$
• Shares issued Apr 1: $3,000,000 \times \frac{9}{12} = 2,250,000$
• Total WANS: $10,000,000 + 2,250,000 = 12,250,000$.

IFRS Foundation. International Accounting Standard 33 (IAS 33): Earnings per Share. Paragraph 10. (Defines the numerator as profit/loss attributable to ordinary equity holders).

IFRS Foundation. International Accounting Standard 33 (IAS 33): Earnings per Share. Paragraphs 19–21. (Defines the weighted average number of shares calculation and time-weighting for shares issued for cash).

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2020). Intermediate Accounting (17th ed.). Wiley. Chapter 16: Dilutive Securities and Earnings Per Share, Section "Basic Earnings Per Share". (Provides academic verification of the standard WANS formula).

To calculate the weighted average number of ordinary shares (WANOS), shares issued for cash at full market price are weighted according to the time they have been outstanding during the period.

First, determine the number of new shares issued:

$$\frac{\$6,000,000}{\$1.50} = 4,000,000 \text{ shares}$$

Next, apply the time-weighting factors:

• Opening shares: 10,000,000 (Outstanding for the full year: $12/12$)
• New issue: 4,000,000 (Outstanding from July 1st: $6/12$)

Calculation:

$$10,000,000 + (4,000,000 \times \frac{6}{12}) = 10,000,000 + 2,000,000 = 12,000,000$$

IFRS Foundation, International Accounting Standard 33: Earnings per Share, Paragraph 20.

Citation: "Using the weighted average number of ordinary shares outstanding during the period reflects the possibility that the amount of shareholders' capital may have varied during the period as a result of a larger or lesser number of shares being outstanding at any time... The weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor."

Massachusetts Institute of Technology (MIT) OpenCourseWare, 15.511 Corporate Accounting, Lecture Notes on EPS.

Relevance: Confirms the methodology for time-weighting shares issued during the period for the calculation of the denominator in Basic EPS.