Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 16, Problem 25E
1.
To determine
Compute the earnings per share amount that Company D must disclose on its 2019 income statement.
2.
To determine
State the manner by which earnings per share can change if the convertible bonds are antidilutive
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Dream Corporation reported net income of $44,000 for 2019. The company has 10,000 shares of common stock issued and outstanding for all of 2019 and no preferred stock. During 2018, Dream issued $400,000 of 8% convertible bonds at par value. Each $1,000 bond can be converted into 24 shares of common stock. No bonds have been converted as of December 31, 2019. Dream has a 30% tax rate.
a) What is the basic EPS?
b) What is the diluted EPS?
Dream Corporation reported net income of $44,000 for 2019. The company has 10,000 shares of common stock issued and outstanding for all of 2019 and no preferred stock. During 2018, Dream issued $400,000 of 8% convertible bonds at par value. Each $1,000 bond can be converted into 24 shares of common stock. No bonds have been converted as of December 31, 2019. Dream has a 30% tax rate.
Required:
1. Calculate the earnings per share amounts that Dream should disclose on its 2019 income statement. If required, round your answer to two decimal places.
Palo Alto Company earned net income of $43,800 during 2019. At the beginning of 2019, it had 10,000 shares of common stock outstanding; an additional 4,000 shares were issued on July 2. During 2019, 600 shares of 8%, $100 par, convertible preferred stock were outstanding the entire year. Dividends on this preferred stock were paid in 2019. Each share is convertible into 5 shares of common stock. The corporate income tax rate is 30%.
Compute the 2019 diluted earnings per share
Chapter 16 Solutions
Intermediate Accounting: Reporting And Analysis
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