Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
2nd Edition
ISBN: 9780134833118
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Textbook Question
Chapter 20, Problem 20.9P
Computing Basic and Diluted EPS, Convertible Bonds, Preferred Stock, Disclosures, Net Loss. The following is a partial income statement for Sonata Enterprises for the current year.
| Partial Income Statement | For the Current Year |
| Loss from Continuing Operations | $ (621,000) |
| Income from Discontinued Operations, net of tax | 3,256,000 |
| Net Income | $ 2,635,000 |
The company is subject to a 40% tax rate Share information for the current year follows.
| Event and Date | Number of Shares |
| 1/1 Beginning balance | 2,000,000 |
| 5/1 New share issue | 360,000 |
| 8/1 New share issue | 120,000 |
| 12/1 Two-for-one split |
Sonata provided you the following information about its capital structure:
- It issued 3%: $1,500,000 convertible debt 2 years ago at par value.
- Each $1,000 par
value bond converts into five shares of the company’s common stock. - It has $800,000 par value, 6% cumulative, nonconvertible
preferred shares outstanding for the entire year. - There were no actual exercises or conversions during the year.
Required
- a. Compute basic and diluted earnings per share for income from continuing operations and net income. Show all computations.
- b. Prepare all required disclosures beginning with income from continuing operations.
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Chapter 20 Solutions
Intermediate Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (2nd Edition)
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