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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Sarasota Corporation has 9% convertible bonds outstanding. It recorded interest expense (net of income taxes) of $6,300 on these bonds during the year. The bonds are convertible into 2,500 shares of common stock. Compute the impact of these convertible bonds on Sarasota’s diluted earnings per share.

To determine

Calculate the impact of the convertible bonds on Company S diluted earnings per share.

Explanation

Earnings per share (EPS):

The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

Calculate the impact of the convertible bonds on Company S diluted earnings per share.

Impact of 9% convertible bonds =Interest expense on bonds Bonds

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