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Throughout the calendar year 2 0 2 0 , Kali Corporation has 4 0 0 , 0 0 0 common shares outstanding ( no preferred

Throughout the calendar year 2020, Kali Corporation has 400,000 common shares
outstanding (no preferred shares issued). In addition, Collie has 5,000,20-year, 7%
bonds outstanding, issued at par in 2018. Each $ 1,000 bond is convertible into 20
common shares after June 30,2021. Collie reported net income of $ 600,000 for
calendar 2020. Their income tax rate is 30%.
Required:
Calculate basic and diluted earnings per share for 2020.
Solution: Please explain the solution
Basic earnings per share: = $ 1.50
Incremental effect of conversion of bonds
= $ 2.45
The conversion of the bonds would be antidilutive. No diluted EPS calculation is
required. The basic and diluted earnings per share of $ 1

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