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On January 1, 2015, Lund Company issued 10-year, €3,000,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 20 ordinary shares of Lund. Lund's net income in 2016 was €240,000, and its tax rate was 40%. Interest expense on the liability component in 2016 was €210,000. The company had 100,000 ordinary shares outstanding throughout 2015. None of the bonds were converted in 2015. 1. Compute diluted earnings per share for 2015. (Round answer to 2 decimal places, e.g. 5.25.) 2. Compute diluted earnings per share for 2015, assuming the same facts as above, except that €1,000,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Lund.

On January 1, 2015, Lund Company issued 10-year, €3,000,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 20 ordinary shares of Lund. Lund's net income in 2016 was €240,000, and its tax rate was 40%. Interest expense on the liability component in 2016 was €210,000. The company had 100,000 ordinary shares outstanding throughout 2015. None of the bonds were converted in 2015. 1. Compute diluted earnings per share for 2015. (Round answer to 2 decimal places, e.g. 5.25.) 2. Compute diluted earnings per share for 2015, assuming the same facts as above, except that €1,000,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Lund.

Intermediate Accounting: Reporting And Analysis
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 21P: Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate...
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On January 1, 2015, Lund Company issued 10-year, €3,000,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 20 ordinary shares of Lund. Lund's net income in 2016 was €240,000, and its tax rate was 40%. Interest expense on the liability component in 2016 was €210,000. The company had 100,000 ordinary shares outstanding throughout 2015. None of the bonds were converted in 2015. 1. Compute diluted earnings per share for 2015. (Round answer to 2 decimal places, e.g. 5.25.) 2. Compute diluted earnings per share for 2015, assuming the same facts as above, except that €1,000,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Lund.
Transcribed Image Text:On January 1, 2015, Lund Company issued 10-year, €3,000,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 20 ordinary shares of Lund. Lund's net income in 2016 was €240,000, and its tax rate was 40%. Interest expense on the liability component in 2016 was €210,000. The company had 100,000 ordinary shares outstanding throughout 2015. None of the bonds were converted in 2015. 1. Compute diluted earnings per share for 2015. (Round answer to 2 decimal places, e.g. 5.25.) 2. Compute diluted earnings per share for 2015, assuming the same facts as above, except that €1,000,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Lund.
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