Nova Gold Miners (NGM) is a gold mining company. NGM currently has two mines operating in Northwestern Ontario, and many exploration claims throughout Ontario and Quebec. 

The company is publicly listed on the Toronto Venture Exchange. NGM is hoping to attract new capital in the coming months, and would like to show strong financial performance for its most recent fiscal year end (December 31, 2020). Analysts are focusing on the current year's earnings per share (EPS) in assessing future growth prospects. The company's shares are currently trading at $30 per share. 

You work in NGM's accounting department and have been assigned to help the CFO prepare preliminary estimates of EPS. You are given the following summarized financial information. 

The company's summarized SFP for non-current liabilities and shareholders' equity follows: 

The company has the following summarized statement of operations: 

The company has the following summarized statement of changes in equity: 

Notes: 

1. Convertible preferred shares were issued on January 1. 

2. Additional common shares were issued on September 1. 

3. Common shares were reacquired on April 1. 

4. Dividends were paid to cumulative preferred shareholders. 

5. Average price of the common shares was $30 per share. 

Instructions 

a. Calculate the basic earnings per share. Round to the nearest cent. 

b. Calculate the diluted earnings per share. Round to the nearest cent. Record your calculations in the following table: 

c. Assess the implications of changes in stock option terms for the fair value of the options. 

d. Assess the implications of changing the terms of the Class A preferred shares for the current year's basic EPS. Complete the table below. 

e. Management is contemplating retiring the convertible bond for $161,000, which represents the current fair value of the bond ($152,500 for the fair value of the bond and $8,500 for the fair value of the conversion feature). 

1. Prepare the journal entry to retire the bond. (Assume the retirement is at the year end.) 

2. Assess the impact of management retiring the bond at December 31 on the future EPS calculations by completing the following table. 

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Non-current liabilities Bond payable, $150,000, 5%, 5-year, 6% market yield $ 147,250 Convertible bond, $150,000, 5%, 5-year, 5% market yield, convertible into 2,000 common shares 145,990 Shareholders' equity Class A preferred shares, 150,000 issued, $1 cumulative dividend per share Class B preferred shares, 50,000 issued, $1 non-cumulative dividend per share, 1,500,000 1,000,000 convertible on a 10:1 basis for common shares Contributed surplus: 10,000 options issued with $20 exercise price, 2-year term 55,000 Contributed surplus: convertible bond option 6,319 Common shares, 1,000,000 issued 1,000,000