Interpretation: Marcella Corporation reported net earnings in 20X6 of \(\$ 1,345,000\), after an after-tax loss from discontinued operations of \(\$ 677,800\). Earnings from continuing operations was \(\$ 2,022,800\). The tax rate was \(30 \%\). Marcella reports the following information regarding its securities:

a. \(400,000 \$ 2\) no-par cumulative preferred shares, issued 1 July \(20 X 6\). The shares are convertible into Class A common shares 6 -for-1 at the option of the investor. The dividend was paid on a quarterly basis.

b. There are \(175,000 \$ 1.20\) no-par cumulative preferred shares outstanding during 20X6. These shares were convertible into Class A common shares 4 -for-1 at the option of the investor. All preferred shares converted to Class A common shares on 31 December 20X6 after the preferred dividend was paid.

c. There are \(\$ 3,000,000\) of convertible bonds payable outstanding during \(20 X 6\), convertible into Class A shares at the rate of 30 shares per \(\$ 1,000\) bond, at the option of the investor. This bond was recorded as a hybrid financial instrument. During the year, interest expense of \(\$ 281,000\) was recorded.

d. Marcella had 2,300,000 Class A common shares outstanding at the beginning of the year. On 1 February, the company repurchased and retired 750,000 Class A common shares on the open market for \(\$ 18\) per share. Marcella issued 50,000 common shares for \(\$ 22\) per share on 1 December.

At the beginning of the year, 200,000 options were outstanding, allowing senior management to purchase 200,000 Class A shares for \(\$ 5\) per share. On 1 September, 60,000 of these options were exercised, when the market value of the common shares was \(\$ 19\) per share. The average market value for the first eight months of the year was \(\$ 15\) per share. The remaining options are still outstanding and will expire in \(20 \times 10\).

All preferred dividends, plus common dividends of \(\$ 1\) per share, were paid on schedule in \(20 \times 6\) At the end of \(20 \mathrm{X} 6\), another 400,000 options, for 400,000 Class A shares at a price of \(\$ 24\), were issued to management. These options have an expiry date of \(20 \mathrm{X} 15\). The average common share price for the entire year was \(\$ 22\) per share.

Required:
1. Calculate required EPS disclosures.
2. Interpret the EPS results