Entity A had the following instrumentsoutstanding all throughout 20x1:12%convertible bonds payable issued at faceamount, each P1,000 bond is convertibleinto 30 ordinary sharesP2,000,000Ordinary shares, P10 par,100,000 shares issued and outstanding1,000,000Profit for the year is P1,200,000.Entity A's income tax rate is 30%.What is thediluted earnings per share in 20x1? *O 8.558.15O 8.05O 8.98

Name: Entity A had the following instrumentsoutstanding all throughout 20x1
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Description: Entity A had the following instrumentsoutstanding all throughout 20x1:12%convertible bonds payable issued at faceamount, each P1,000 bond is convertibleinto 30 ordinary sharesP2,000,000Ordinary shares, P10 par,100,000 shares issued and outstanding1,

Earning per share The purpose of calculating earning per share in the business entity which can know…

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Entity A had the following instruments outstanding all throughout 20x1:12% convertible bonds payable issued at face amount, each P1,000 bond is convertible into 30 ordinary shares P2,000,0000rdinary shares, P10 par, 100,000 shares issued and outstanding 1,000,000Profit for the year is P1,200,000. Entity A's income tax rate is 30%.What is the diluted earnings per share in 20x1? * 8.55 O 8.15 O 8.05 O 8.98

Entity A had the following instruments outstanding all throughout 20x1:12% convertible bonds payable issued at face amount, each P1,000 bond is convertible into 30 ordinary shares P2,000,0000rdinary shares, P10 par, 100,000 shares issued and outstanding 1,000,000Profit for the year is P1,200,000. Entity A's income tax rate is 30%.What is the diluted earnings per share in 20x1? * 8.55 O 8.15 O 8.05 O 8.98

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 10MC

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On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.
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