16-23

ary 2, 2016 stock. Cuen din were issued a par bonds have been ting basic earunes per stock and convertible discontinued opera 1. Convertible preferred stock: 2,500 shares of 8.5, JJU , po for $60 per share. Each share of preferred stock is convertible into 3 shares of common stoel SHOW ME HOW dends have been declared and paid. To date, no preferred stock has been converted 2. Convertible bonds: Bonds with a face value of $250,000 and an interest rate of 5.5% were in 2018. Each $1,000 bond is convertible into 20 shares of common stock. To date, no be converted. Francis earned net income of $72,500 during 2019. The income tax rate is 30%. Required: 1. Compute the number of shares of common stock that Francis should use in calculating basic e share for 2019, 2. Calculate basic earnings per share for 2019. 3. Calculate diluted carnings per share for 2019 and the incremental EPS of the preferred stock and bonds. 4. Next Level Assume the same facts as above except that net income included a loss from discontinued tions of $18,000 net of income taxes. Compute basic EPS and show how it should be reported to shan ers. You do not have to calculate diluted EPS for this case. E16-23 Share Options, EPS Marion Company has 30,000 shares of common stock outstanding during all of 2019. Thi LO 16.5 common stock has been selling at an average market price of $45 per share. Marion also has outstanding for entire year compensatory share options to purchase 4,000 shares of common stock at $32 per share. The unr nized compensation cost (net of tax) relating to these share options is $3 per share. During 2019, Marion carved income of $36,000 after income taxes of 30%. Required: 1. Compute Marion's 2019 diluted earnings per share. 2. Next Level Assume Marion uses IFRS. Discuss what Marion would do differently for computing earnings per share, and then compute its earnings per share. 16-24 Convertible Preferred Stock and EPS Palo Alto Company earned net income of $43,800 during 2019. At the . 16.5 beginning of 2019, it had 10,000 shares of common stock outstanding, an additional 4,000 shares were issued on July 2. During 2019, 600 shares of 8%, $100 par, convertible preferred stock were outstanding the entire year. Dividends on this preferred stock were paid in 2019. Each share is convertible into 5 shares of common stock. The corporate income tax rate is 30%. Required: Compute the 2019 diluted earnings per share. ary 2, 2016 stock. Cuen din were issued a par bonds have been ting basic earunes per stock and convertible discontinued opera 1. Convertible preferred stock: 2,500 shares of 8.5, JJU , po for $60 per share. Each share of preferred stock is convertible into 3 shares of common stoel SHOW ME HOW dends have been declared and paid. To date, no preferred stock has been converted 2. Convertible bonds: Bonds with a face value of $250,000 and an interest rate of 5.5% were in 2018. Each $1,000 bond is convertible into 20 shares of common stock. To date, no be converted. Francis earned net income of $72,500 during 2019. The income tax rate is 30%. Required: 1. Compute the number of shares of common stock that Francis should use in calculating basic e share for 2019, 2. Calculate basic earnings per share for 2019. 3. Calculate diluted carnings per share for 2019 and the incremental EPS of the preferred stock and bonds. 4. Next Level Assume the same facts as above except that net income included a loss from discontinued tions of $18,000 net of income taxes. Compute basic EPS and show how it should be reported to shan ers. You do not have to calculate diluted EPS for this case. E16-23 Share Options, EPS Marion Company has 30,000 shares of common stock outstanding during all of 2019. Thi LO 16.5 common stock has been selling at an average market price of $45 per share. Marion also has outstanding for entire year compensatory share options to purchase 4,000 shares of common stock at $32 per share. The unr nized compensation cost (net of tax) relating to these share options is $3 per share. During 2019, Marion carved income of $36,000 after income taxes of 30%. Required: 1. Compute Marion's 2019 diluted earnings per share. 2. Next Level Assume Marion uses IFRS. Discuss what Marion would do differently for computing earnings per share, and then compute its earnings per share. 16-24 Convertible Preferred Stock and EPS Palo Alto Company earned net income of $43,800 during 2019. At the . 16.5 beginning of 2019, it had 10,000 shares of common stock outstanding, an additional 4,000 shares were issued on July 2. During 2019, 600 shares of 8%, $100 par, convertible preferred stock were outstanding the entire year. Dividends on this preferred stock were paid in 2019. Each share is convertible into 5 shares of common stock. The corporate income tax rate is 30%. Required: Compute the 2019 diluted earnings per share