In 2024, Chirac Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of
Question:
In 2024, Chirac Enterprises issued, at par, 60 $1,000, 8% bonds, each convertible into 100 shares of common stock. Chirac had revenues of $17,500 and expenses other than interest and taxes of $8,400 for 2025. (Assume that the tax rate is 20%.) Throughout 2025, 2,000 shares of common stock were outstanding; none of the bonds was converted or redeemed.
Instructions
a. Compute diluted earnings per share for 2025.
b. Assume the same facts as those assumed for part (a), except that the 60 bonds were issued on September 1, 2025 (rather than in 2024), and none have been converted or redeemed. Compute diluted earnings per share for 2025.
c. Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2025. Compute diluted earnings per share for 2025.
Step by Step Answer:
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield