Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 20, Problem 20.4E
Computing Basic and Diluted EPS, Convertible Bonds,
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V6. On January 1, Stunt Corp. had outstanding convertible bonds with a face value of $1,000,000 and an unamortized discount of $100,000. On that date, the bonds were converted into 100,000 shares of $1 par stock. The market value on the date of conversion was $12 per share. The transaction will be accounted for with the book value method. By what amount will Stunt’s stockholders’ equity increase as a result of the bond conversion?
JackieStamping began the current year with 470,000common shares outstanding and issued an additional 120,000shares on September1. The firm has $11,300,000, 1.5% convertible bonds on June 30 (i.e., $169,500coupon interest annually), which are convertible into 331,000 shares of common stock. The firm issued the bonds at par and did not convert any during the current year. It also had $1,170,000 par value, 4%nonconvertible, noncumulative preferred stock outstanding for the full year and declared dividends for the current year. The company is subject to a 40%effective tax rate and net income is $4,100,000.
RequirementBased on this information, compute basic and diluted earnings per share for the current year.
c. A company has $20,912,543 of net income during the year and 934,887 common shares
outstanding, 96,508 of which are treasury shares, and 2,000,000 authorized shares.
Assume the company has 1,000 convertible bonds with a total face value of $1,000,000 since the
beginning of the year. The bonds were issued at par with a 5% coupon rate and each bond
converts to 2 shares of stock. The company has an effective tax rate of 21%.
Compute diluted EPS.
Enter your answer in dollars rounded to 2 decimal places with no $ or commas
Chapter 20 Solutions
Intermediate Accounting
Ch. 20 - Prob. 20.1QCh. 20 - Prob. 20.2QCh. 20 - If-Converted Method. Does the if-converted...Ch. 20 - Diluted EPS. If all potentially dilutive...Ch. 20 - Diluted EPS. Can diluted earnings per share on...Ch. 20 - Diluted EPS, Convertible Debt, and Preferred...Ch. 20 - Prob. 20.7QCh. 20 - Prob. 20.8QCh. 20 - Prob. 20.9QCh. 20 - EPS Disclosures. is an entity required to present...
Ch. 20 - Prob. 20.11QCh. 20 - Hutchins Company had 200,000 shares of common...Ch. 20 - Prob. 20.2MCCh. 20 - Prob. 20.3MCCh. 20 - Prob. 20.4MCCh. 20 - Refer to the information about Hutchins Company in...Ch. 20 - Prob. 20.6MCCh. 20 - Prob. 20.1BECh. 20 - Prob. 20.2BECh. 20 - Computing Income for Basic EPS. Russo Watches, Ltd...Ch. 20 - Prob. 20.4BECh. 20 - Compute Weighted-Average Number of Shares...Ch. 20 - Compute Weighted-Average Number of Shares...Ch. 20 - Prob. 20.7BECh. 20 - Prob. 20.8BECh. 20 - Prob. 20.9BECh. 20 - Prob. 20.10BECh. 20 - Prob. 20.11BECh. 20 - Computing Basic and Diluted EPS, Options. Nicks...Ch. 20 - Computing Diluted EPS, Convertible Debt. Axelon...Ch. 20 - Computing Basic and Diluted EPS, Preferred Stock....Ch. 20 - Computing Weighted-Average Number of Common Shares...Ch. 20 - Prob. 20.3ECh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.5ECh. 20 - Computing Basic and Diluted EPS, Convertible Bonds...Ch. 20 - Computing Basic and Diluted EPS, Convertible Bonds...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Options,...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.12ECh. 20 - Prob. 20.1PCh. 20 - Prob. 20.2PCh. 20 - Computing Basic and Diluted EPS. Convertible...Ch. 20 - Prob. 20.4PCh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.7PCh. 20 - Prob. 20.8PCh. 20 - Prob. 1JCCh. 20 - Prob. 1FSCCh. 20 - Prob. 1SSCCh. 20 - Basis for Conclusions Case 1: Antidilutive...Ch. 20 - Basis for Conclusions Case 2: Treasury Stock...
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- Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The exercise price of these options is $3.75. The company also has $200,000 of convertible bonds with an effective conversion price of $4.00. The average market share price for the reporting period is $7.50. What is the diluted shares outstanding using the treasury stock method & if-converted methodsarrow_forwardOn 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.arrow_forwardABC, Inc. has the following securities outstanding in the market. Common Stock 10,000,000 shares outstanding at a market price of $150.00. A recent analyst report shows these shares have a beta of 1.2. Preferred Stock 250,000 shares outstanding with a dividend of 5% of par. Market price is $75, a $50 discount to par. AA-Rated Corporate Bonds 750,000 bonds with par value of $1000 each and a semi-annual coupon of 7.5%. The bonds mature in 25 years and are currently selling at a price of 98.75. Today the expected return on the market is 8% and the market risk premium is 4%. The company has a marginal tax rate of 21%. What is ABC, Inc.'s WACC?arrow_forward
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Earnings per share (EPS), basic and diluted; Author: Bionic Turtle;https://www.youtube.com/watch?v=i2IJTpvZmH4;License: Standard Youtube License