th of the following convertible securities is the dilutive in the calculation of diluted EPS? stion 3 options: vertible bonds with an incremental EPS of $2.2 vertible bonds with an incremental EPS of $6.0 vertible preferred shares with an incremental E 2.85

th of the following convertible securities is the dilutive in the calculation of diluted EPS? stion 3 options: vertible bonds with an incremental EPS of $2.2 vertible bonds with an incremental EPS of $6.0 vertible preferred shares with an incremental E 2.85

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 21E: Mills Company had five convertible securities outstanding during all of 2019. It paid the...

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Mills Company had five 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 convertible security is described in the following table. The 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 the securities would be included in the diluted earnings per share computations.
On 1 July 2022, SFU Co issued a convertible bond at par value of $20 million and has recordedit as a non-current liability. The bond is redeemable for cash on 30 June 2024 at par. Bondholderscan however, opt for the conversion in the form of a fixed number of shares. Interest on the bondis payable at a rate of 4% a year in arrears. The interest paid in the year has been presented asfinance cost. The interest rate on similar debt without a conversion option is 10%, with a presentvalue of $17,91 million at 1 July 2022. Discuss how the convertible bonds should be accounted for during the 2023 financialperiod. Please also show the calculations for my understanding
On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. 1. What if before maturity date, bond conversion privilege is fully exercised? Provide the journal entries for each problems and assumptions
Maple Aircraft has issued a 4¾% convertible subordinated debenture due 3 years from now. The conversion price is $47 and the debenture is callable at 102.75% of face value. The market price of the convertible is 91% of face value, and the price of the common is $41.50. Assume that the value of the bond in the absence of a conversion feature is about 65% of face value. 4. At what stock price is the conversion value equal to the bond value? 5. Can the market price be less than the conversion value? 6. How much is the convertible holder paying for the option to buy one share of common stock? 7. By how much does the common have to rise after three years to justify conversion? This is the second part of my first submitted questions. please explain in full detail. Thank you.
Maple Aircraft has issued a 4¾% convertible subordinated debenture due 3 years from now. The conversion price is $47 and the debenture is callable at 102.75% of face value. The market price of the convertible is 91% of face value, and the price of the common is $41.50. Assume that the value of the bond in the absence of a conversion feature is about 65% of face value. In the absence of the conversion feature, what is the current yield and yield to maturity? What is the conversion ratio of the debenture? If the conversion ratio were 50, what would be the conversion price? What is the conversion value? At what stock price is the conversion value equal to the bond value? Can the market price be less than the conversion value? How much is the convertible holder paying for the option to buy one share of common stock? . By how much does the common have to rise after three years to justify conversion? please explain in full detail.Thank you.
On January 1, 2020, ABC Company issued P50,000,000, 3-year convertible bonds at par with thefollowing considerations:(a) there were no issue costs related(b) the coupon rate is 10%, payable annually in arrears on December 31(c) the bond is redeemable at par on January 1, 2023(d) bonds issued by similar companies without any conversion rights currently bear interest at 15%Required:Prepare the necessary journal entries assuming the bondholders:a. opted for conversionb. opt for cash payment
On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. What if before maturity date, bond conversion privilege is partially exercised( 40% of the BCP)? Provide the journal entries for each problems and assumptions
On January 1, 2019, Lin plc issued a convertible bond with a par value of £50,000 inthe market for £60,000. The bonds are convertible into 6,000 ordinary shares of £1 per sharepar value. The bond has a 5-year life and has a stated interest rate of 10% payable annually.The market interest rate for a similar non-convertible bond at January 1, 2019, is 8%. Theliability component of the bond is computed to be £53,993. The following bond amortizationschedule is provided for this bond.Effective-Interest Method10% Bond Discounted at 8%Date Cash Paid InterestExpense PremiumAmortized Carrying Amountof Bonds1/1/19 £53,99312/31/19 £5,000 £4,319 £681 53,31212/31/20 5,000 4,265 735 52,57712/31/21 5,000 4,206 794 51,78312/31/22 5,000 4,143 857 50,92612/31/23 5,000 4,074 926 50,000Instructionsa. Prepare the journal entry to record the issuance of the convertible bond on January 1,2019.b. Prepare the journal entry to record the payment of interest on December 31, 2020.c. Assume that the bonds were…
On January 1, 2019, Lin plc issued a convertible bond with a par value of £50,000 inthe market for £60,000. The bonds are convertible into 6,000 ordinary shares of £1 per sharepar value. The bond has a 5-year life and has a stated interest rate of 10% payable annually.The market interest rate for a similar non-convertible bond on January 1, 2019, is 8%. Theliability component of the bond is computed to be £53,993. The following bond amortizationschedule is provided for this bond.Effective-Interest Method10% Bond Discounted at 8%Date Cash Paid InterestExpense PremiumAmortized Carrying Amountof Bonds1/1/19 £53,99312/31/19 £5,000 £4,319 £681 53,31212/31/20 5,000 4,265 735 52,57712/31/21 5,000 4,206 794 51,78312/31/22 5,000 4,143 857 50,92612/31/23 5,000 4,074 926 50,000 Prepare the journal entry to record the conversion on December 31, 2021. Assume thatthe accrual of interest related to 2021 has been recorded.d. Assume that the convertible bonds were repurchased on December 31, 2021,…
Computalog Inc. showed the following on its December 31, 2023, balance sheet: Bonds payable, convertible $ 4,040,000 Less: Unamortized discount 14,544 $ 4,025,456 Required: 1. Assuming the bonds are convertible into 404,000 common shares, journalize the conversion on January 1, 2024, when the market value per common share was $10.25. 2. How will the conversion of bonds into common shares affect the elements of the balance sheet (assets, liabilities, equity)?
On November 16, 2020, Bilbond issued its 10-year, 7% P1,000,000 convertible bonds at 122. The bonds would have sold for P1,154,435 without the conversion feature. The effective interest rate of similar bonds without the conversion feature is 5%. What is the increase in equity on the date of issuance?
On January 1, 2022, Cai Ltd. issued a 10% convertible bond at par, with a face value of ¥100,000, maturing on January 1, 2032 (amounts in thousands). The bond is convertible into ordinary shares of Cai at a conversion price of ¥2,500 per share. Interest is payable annually. At date of issue, Cai could have issued at par non-convertible debt with a 10-year term bearing an interest rate of 11% instruction a) Prepare the journal entry to record the issuance of the convertible debt on January 1, 2022. b) On January 1, 2025, Cai makes a tender offer to the holder of the convertible debt to repurchase the bond for ¥112,000, which the holder accepts. At the date of repurchase, Cai could have issued non-convertible debt with a 7-year term at an effective-interest rate of 8%. Prepare the journal entry to record this repurchase on January 1, 2025.