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Avani Corporation Berhad has the following balance sheet information at December 31, 2020. Current liabilities RM 545,000 Convertible bonds (RM1,000 par, 7%) 4,000,000 Common stock
Avani Corporation Berhad has the following balance sheet information at December 31, 2020. Current liabilities RM 545,000 Convertible bonds (RM1,000 par, 7%) 4,000,000 Common stock (RM1 par, 100,000 shares issued) 100,000 Additional paid-in capital 1,000,000 Retained earnings 2,000,000 Treasury stock (9,000 shares) (360,000) Total liabilities and shareholder's equity RM7,285,000 The convertible bonds were issued at par on April 1, 2019 and are convertible into Avani's common stock at a ratio of 25 shares of stock to 1 bond. Avani did not have any treasury stock at December 31, 2019 and purchased the 9,000 shares evenly throughout 2020. The average price of the common stock for the year was RM40, and the year-end price was RM45. Avani Corporation Berhad also has 60,000 outstanding and exercisable qualified employee stock options. Employees obtain one share of stock for each option exercised. The exercise price for each option is RM21 per share. Avani's net income for the year ended 2020 was RM292,500. Its tax rate for the year was 35%. Required: (a) Calculate basic earnings per share (EPS) for the year ended December 31, 2020. Show all computations. (b) (4 marks) Calculate diluted earnings per share (EPS) for the year ended December 31, 2020. Show all computations. (16 marks)
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