Question
Wildhorse Ltd. had 50,000 common shares outstanding throughout its fiscal year ending December 31, 2020. The company also had outstanding a convertible bond with a
Wildhorse Ltd. had 50,000 common shares outstanding throughout its fiscal year ending December 31, 2020. The company also had outstanding a convertible bond with a face value of $903,000 that had been issued in 2011. The bond paid 8% interest per year and was convertible to 7,000 common shares. Wildhorse had net income for 2020 of $350,000 and was subject to a 25% income tax rate. (For simplicity, ignore the requirement to record the debt and equity portions of the convertible bond separately).
a. Calculate basic earnings per share. (Round answer to 2 decimal places, e.g. 15.25.)
b. Calculate diluted earnings per share. (Round answer to 2 decimal places, e.g. 15.25.)
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