Question 5 (30 marks)

For Year 8, Westmount Corp. had 200,000 common shares outstanding for the full year. Westmount follows IFRS. Market prices of the common shares during Year 8 were:

January 1: $45; Years average: $50; December 31: $52.

Westmounts income tax rate is 30%.

During Year 8, there were:

• 1. 30,000 outstanding options to buy common shares at $40 a share;

  2. 20,000, $7, no par value, cumulative and convertible preferred shares outstanding. Each preferred share is convertible into three common shares;

  3. $2,000,000 of 8% convertible bonds issued at par. Each $1,000 bond is convertible into 20 common shares.

The corporation reported $750,000 net income for calendar Year 8.

Instructions

Calculate basic and diluted earnings per share for Year 8. Show all calculations for possible part marks. Review the four example videos from Module 4. Arrange your answer as per the best method used in the videos.