1. Hanson Co. had 200,000 ordinary shares, 20,000 shares of convertible preference shares, and $1,000,000 of 10% convertible bonds outstanding during 2011. The preference shares are convertible into 40,000 ordinary shares. During 2011, Hanson paid dividends of $1.20 per share on the ordinary shares and $4 per share on the preference shares. Each $1,000 bond is convertible into 45 ordinary shares. The net income for 2011 was $800,000 and the income tax rate was 30%. Diluted earnings per share for 2011 is (rounded to the nearest penny) (Points : 4)

$2.77. $2.81. $3.05. $3.33.

2. Yoder, Incorporated, has 3,200,000 ordinary shares outstanding on December 31, 2010. An additional 800,000 ordinary shares were issued on April 1, 2011, and 400,000 more on July 1, 2011. On October 1, 2011, Yoder issued 20,000, $1,000 face value, 8% convertible bonds. Each bond is convertible into 20 ordinary shares. No bonds were converted in 2011. What is the number of shares to be used in computing basic earnings per share and diluted earnings per share, respectively? (Points : 4)

4,000,000 and 4,000,000 4,000,000 and 4,100,000 4,000,000 and 4,400,000 4,400,000 and 5,200,000

3. Anazazi Co. offers all its 10,000 employees the opportunity to participate in an employee share-purchase plan. Under the terms of the plan, the employees are entitled to purchase 100 ordinary shares (par value $1 per share) at a 20 percent discount. The purchase price must be paid immediately upon acceptance of the offer. In total, 8,500 employees accept the offer, and each employee purchases on average 80 shares at $22 share (market price $27.50). Under IFRS, Anazazi Co. will record (Points : 4)

No compensation since the plan is used to raise capital, not compensate employees. Compensation expense of $5,500,000. Compensation expense of $18,700,000. Compensation expense of $3,740,000.

7. On January 2, 2012, for past services, Rosen Corp. granted Nenn Pine, its president, 16,000 share appreciation rights that are exercisable immediately and expire on January 2, 2013. On exercise, Nenn is entitled to receive cash for the excess of the market price of the shares on the exercise date over the market price on the grant date. Nenn did not exercise any of the rights during 2010. The market price of Rosen's shares was $30 on January 2, 2012, and $45 on December 31, 2012. As a result of the share appreciation rights, Rosen should recognize compensation expense for 2012 of (Points : 4)

$0. $80,000. $240,000. $480,000.

9. Lerner Co. had 200,000 ordinary shares, 20,000 shares of convertible preference shares, and $1,000,000 of 10% convertible bonds outstanding during 2011. The preference shares are convertible into 40,000 ordinary shares. During 2011, Lerner paid dividends of $.90 per ordinary share and $3.00 per preference share. Each $1,000 bond is convertible into 45 ordinary shares. The net income for 2011 was $600,000 and the income tax rate was 30%. Diluted earnings per share for 2011 is (rounded to the nearest penny) (Points : 4)

$2.14. $2.25. $2.35. $2.46.

10. On June 30, 2010, Yang Corporation granted compensatory share options for 20,000 shares of its $24 par value ordinary shares to certain of its key employees. The market price of the ordinary shares on that date was $31 per share and the option price was $28. Using a fair value option pricing model, total compensation expense is determined to be $64,000. The options are exercisable beginning January 1, 2012, providing those key employees are still in the employ of the company at the time the options are exercised. The options expire on June 30, 2013. On January 4, 2012, when the market price of the shares was $36 per share, all options for the 20,000 shares were exercised. The service period is for two years beginning January 1, 2010. Using the fair value method, what should be the amount of compensation expense recorded by Yang Corporation for these options on December 31, 2010? (Points : 4)

$64,000 $32,000 $15,000 $0

11. On May 1, 2012, Marly Co. issued $500,000 of 7% bonds at 103, which are due on April 30, 2022. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Marlys ordinary shares $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2012, the fair value of Marlys shares was $35 per share and of the warrants was $2. On May 1, 2012, Marly should record bonds payable at (Points : 4)

$515,000. $500,000. $480,000. $494,400.

12. Lerner Co. had 200,000 ordinary shares, 20,000 shares of convertible preference shares, and $1,000,000 of 10% convertible bonds outstanding during 2011. The preference shares are convertible into 40,000 ordinary shares. During 2011, Lerner paid dividends of $.90 per ordinary share and $3.00 per preference share. Each $1,000 bond is convertible into 45 ordinary shares. The net income for 2011 was $600,000 and the income tax rate was 30%. Basic earnings per share for 2011 is (rounded to the nearest penny) (Points : 4)

$2.21. $2.42. $2.51. $2.70.