On January 1, 2022, ABC Co. has 100,000 outstanding ordinary shares. On May 1, 2022, ABC issued 3,000 P 1,000 convertible bonds payable with 12% rate. Each bond is convertible into six ordinary shares. By October 1 of the same year, all the bonds are converted. By year-end, ABC reported net income of P 4,000,000. Income tax rate is 30%. How much is the interest expense to be added back to net income for diluted EPS computation?
On January 1, 2022, ABC Co. has 100,000 outstanding ordinary shares. On May 1, 2022, ABC issued 3,000 P 1,000 convertible bonds payable with 12% rate. Each bond is convertible into six ordinary shares. By October 1 of the same year, all the bonds are converted. By year-end, ABC reported net income of P 4,000,000. Income tax rate is 30%. How much is the interest expense to be added back to net income for diluted EPS computation?
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 1PROB
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On January 1, 2022, ABC Co. has 100,000 outstanding ordinary shares. On May 1, 2022, ABC issued 3,000 P 1,000 convertible bonds payable with 12% rate. Each bond is convertible into six ordinary shares. By October 1 of the same year, all the bonds are converted. By year-end, ABC reported net income of P 4,000,000. Income tax rate is 30%.
How much is the interest expense to be added back to net income for diluted EPS computation?
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