XYZ Company Ltd has 1,000,000 $1 ordinary shares and 1,000 $100 10% convertible bonds to beissued at par value. Each bond is convertible to 20 ordinary shares on demand, all of which have been inissue for the whole of the reporting period. XYZ Company Ltd's share price is $4.50 per share andearnings for the period are $500,000. The tax rate applicable to the entity is 21%.(a) What is the basic earnings per share?(b) What is the diluted earnings per share?

Diluted EPS is calculated under the assumption that all potentially dilutive securities (…

Answered: XYZ Company Ltd has 1,000,000 $1…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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Wild Cat Corporation has a $1,000,000 debt issue that is convertible into 10,000 prdinary shares Interest expense on the liability component of this convertible bond is $60,000. Net income for the year is $210,000, the weighted average number of ordinary shares outstanding is 100,000 shares, and the tax rate is 40 percent. In this case assumed conversion of the debt into ordinary shares at the beginning of the year. Requirement. a. Calculate Basic EPS b. Calculate Diluted EPS
On January 1, Cee Company's ordinary share capital amounted to P1,000,000, with P10 par value. On April 1, 2019, the entity issued P5,000,000, 10% bonds with a face value of P1,000. The bonds were converted on October 1, 2019 and 20 ordinary shares were issued in exchange for each bond. Net income was P10,000,000. The income tax rate is 30%. Requirement: 1. What is the amount of basic earnings per share? 2. What is is the amount of diluted earnings per share?
Crane Limited had $2.39 million of bonds payable outstanding and the unamortized premium for these bonds amounted to $44,600. Each $1,000 bond was convertible into 20 preferred shares. All bonds were then converted into preferred shares. The Contributed Surplus - Conversion Rights account had a balance of $21,500. Assume that the company follows IFRS. a. Assuming that the book value method was used, what entry would be made? Account Titles and Explanation Debit Credit b. Assume that Crane Ltd. offers $9,000 to induce early conversion. What journal entry would be made? Account Titles and Explanation Debit Credit
At the beginning of the current year, Cove Company, a closely-held entity, issued 6% bonds with a maturity value of P6,000,000, together with 10,000 ordinary shares of P50 par value, for a combined car amount of P11,000,000. If issued separately, the bonds would have sold for P4,000,000 an 8% yield to maturity basis. 1. What amount of the proceeds should be allocated to the ordinary shares? Please show solution
Entity A had the following instruments outstanding all throughout 20x1:12% convertible bonds payable issued at face amount, each P1,000 bond is convertible into 30 ordinary shares P2,000,000Ordinary shares, P10 par, 100,000 shares issued and outstanding 1,000,000Profit for the year is P1,200,000. Entity A's income tax rate is 30%.What is the diluted earnings per share in 20x1? * O 8.55 8.15 O 8.05 O 8.98
On January 1, 2022, Shamrock SA issued 10-year, €1,870,000 face value, 6% bonds, at par. Each €1,000 bond is convertible into 15 ordinary shares of Shamrock. Shamrock's net income in 2023 was €462,800, and its tax rate was 40%. Interest expense on the liability component in 2023 was €130,900. The company had 104,000 ordinary shares outstanding throughout 2022. None of the bonds were converted in 2022. (a) Compute diluted earnings per share for 2022. (Round answer to 2 decimal places, e.g. 2.55.) Diluted earnings per share € (b) Compute diluted earnings per share for 2022, assuming the same facts as above, except that €1,040,000 of 6% convertible preference shares were issued instead of the bonds. Each €100 preference share is convertible into 5 ordinary shares of Shamrock. (Round answer to 2 decimal places, eg. 2.55.) Diluted earnings per share €
Pluto Company had P600,000 convertible 8% bonds payable outstanding on June 30. Each P1,000 bond was convertible into 10 ordinary shares of P50 par value. On July 1, the interest was paid to bondholders, and the bonds were converted into ordinary shares, which had a fair value of P75 per share. The unamortized premium on these bonds was P12,000 at the date of conversion. No Equity component was recognized when the bonds were originally issued. What amount should be recorded as increase in share capital as a result of the bond conversion? 300,000 b. 306,000 c. 450,000 d. 600,000 (10-7-141) Refer to no. 14. What amount should be recorded as increase in share premium as a result of the bond conversion? 312,000 b. 306,000 c. 162,000 d. 12,000
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On July 1, Year 1, XYZ Corporation purchased as a long-term investment a $2 million face amountABC Co. 6% bond for $2,025,000 plus accrued interest to yield 5.75%. On December 31, Year 1,the bonds had a fair value of $1,850,000. What amount of income should XYZ report on its incomestatement for the year ended December 31, Year 1, related to this bond investment if it is classifiedas a held-to-maturity security?a. $120,000b. $116,438c. $121,500d. $115,000
On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. CONVERTIBLE BONDS - CONVERSION Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of $200,000. Without the conversion feature, the bonds are selling on this date at 102. Requirement: Provide the entry to record the retirement of the bonds.
On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of P200,000. Without the conversion feature, the bonds are selling on this date at 102. Requirement: Provide the entry on January 1, 20x3 to record the retirement of the bonds.
On January 1, 2X16, Manila Co. has 100,000 outstanding ordinary shares. During the year, Manila Co. reported a net income of P5,000,000. The income tax rate is 30%. Besides, Manila Co. has 4,000, 10% convertible bonds with 1,000 face amount. Each bond is convertible into five (5) ordinary shares. Required: Solve for the following: 1. Determine the amount of basic earnings per share for the year. 2. Determine the amount of diluted earnings per share under each of the following scenarios. a. Bonds were issued on January 1, 2X16, and there were no conversions made during the year. b. Bonds were issued on April 1, 2X16, and there were no conversions made during the year. c. Bonds were issued in the previous year and were converted on October 1, 2X16.

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