A. B. Applewood Electronics Itd reported net earnings of $ 500 000 for the year ending...
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A. B. Applewood Electronics Itd reported net earnings of $ 500 000 for the year ending December 31,2019. The company had 250 000 shares of $1 par value common stock and 60 000 shares of $20 par value convertible preference shares outstanding during the year. The dividend rate on the preference was $3 per share. Each share of the convertible preferences shares can be converted into two shares of common shares Required: Calculate for the firm: i. the basic earnings per share for 2019. ii. the diluted EPS. for 2019. (3 marks) (4 marks) Newport Ltd had an issued share capital at 1 April 2018 of: $400,000 made up of $0.50 shares. 100,000 $1 convertible preference shares receiving a dividend of $5.00 per share: these shares were convertible in 2018 on the basis of 1 ordinary share for 2 preference shares. The company has the following loan capital outstanding: $500,000 5% convertible loans: the loan was convertible in 2018 on the basis of 250 shares for each $2,000 of loan; the tax rate was 30%. Earnings for the year ended 31 March 2019 were $10,000,000 after tax. Required: i. Calculate the diluted EPS for 2019. ii. Outline the need to disclose a diluted EPS figure and on the relevance of this to the shareholders. (6 marks) (4 marks) (Total 20 marks) A. B. Applewood Electronics Itd reported net earnings of $ 500 000 for the year ending December 31,2019. The company had 250 000 shares of $1 par value common stock and 60 000 shares of $20 par value convertible preference shares outstanding during the year. The dividend rate on the preference was $3 per share. Each share of the convertible preferences shares can be converted into two shares of common shares Required: Calculate for the firm: i. the basic earnings per share for 2019. ii. the diluted EPS. for 2019. (3 marks) (4 marks) Newport Ltd had an issued share capital at 1 April 2018 of: $400,000 made up of $0.50 shares. 100,000 $1 convertible preference shares receiving a dividend of $5.00 per share: these shares were convertible in 2018 on the basis of 1 ordinary share for 2 preference shares. The company has the following loan capital outstanding: $500,000 5% convertible loans: the loan was convertible in 2018 on the basis of 250 shares for each $2,000 of loan; the tax rate was 30%. Earnings for the year ended 31 March 2019 were $10,000,000 after tax. Required: i. Calculate the diluted EPS for 2019. ii. Outline the need to disclose a diluted EPS figure and on the relevance of this to the shareholders. (6 marks) (4 marks) (Total 20 marks)
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A i To calculate the basic earnings per share EPS for 2019 we need to divide the net earnings by the weighted average number of common shares outstand... View the full answer
Related Book For
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780134486840
6th Edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
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