INTERMEDIATE ACCT VOL.2>CUSTOM<
9th Edition
ISBN: 9781307165067
Author: SPICELAND
Publisher: MCG/CREATE
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Textbook Question
Chapter 19, Problem 19.14P
EPS; convertible preferred stock; convertible bonds; order of entry
• LO19–7, LO19–9, LO19–10
Information from the financial statements of Henderson-Niles Industries included the following at December 31, 2018:
Common shares outstanding throughout the year | 100 million |
Convertible |
60 million |
Convertible 10% bonds (convertible into 13.5 million shares of common) | $900 million |
Henderson-Niles’s net income for the year ended December 31, 2018, is $520 million. The income tax rate is 40%. Henderson-Niles paid dividends of $2 per share on its preferred stock during 2018.
Required:
Compute basic and diluted earnings per share for the year ended December 31, 2018.
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(Note: This is a variation of E 19–17 modified to include convertible bonds).On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1,2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was$150 million. The income tax rate is 40%.Also outstanding at December 31 were incentive stock options granted to key executives on September 13,2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of$56 per share. During 2018, the market price of the common shares averaged $70 per share.In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value.Required:Compute Berclair’s basic and diluted…
Chapter 19 Solutions
INTERMEDIATE ACCT VOL.2>CUSTOM<
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