Earnings per share: Earnings per share (EPS) indicates the income earned per share of common stock. EPS is calculated as Basic EPS and Diluted EPS. The income for EPS is calculated by subtracting the preference dividends. The income is divided by weighted-average common shares outstanding. This is Basic EPS. For the income statement presentation of earnings per share any losses from discontinued operations should be deducted from the income from discontinued operations to arrive at the net income.
To determine the number of shares to be used for calculating EPS.
Given information: Shares: 800,000.
Additional shares: 400,000.
Bonds: 600,000.
Rate: 8%.
Bond par: $1,000.
Conversion: 40.
Net income: $1,540,000.
Tax rate: 40%.
(a1)
(a2) To determine: To determine the shares for the calculation of Diluted earnings per share.
(b1) To determine: To determine the earnings figures to be used for calculating Basic EPS.
(b2) To determine: To determine the earnings figures to be used for calculating Diluted EPS.
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Chapter 16 Solutions
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