Gamer Gear Inc. (GGI) prepares its financial statements in accordance with IFRS. GGI's capital structure on...

  

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Gamer Gear Inc. (GGI) prepares its financial statements in accordance with IFRS. GGI's capital structure on December 31, 2018, included the following: • 300,000 common shares issued and outstanding • 100,000 cumulative preferred shares with an annual dividend of $2 per share - At the option of the holder, each preferred share can be converted into half of a common share at any time. The investor receives one common share for every two preferred shares tendered. • A stock option that grants the holder the right to purchase 9,000 common shares for $10 each at any time before December 31, 2030. • Bond – $2,000,000, 4.2%, semi-annual bonds maturing December 31, 2030. At the option of the holder, each $1,000 bond can be converted into eight common shares at any time before January 1, 2023. The bonds were issued at face value. During 2019, GGI entered into the following capital transactions: • April 1, 2019 – issued 50,000 common shares for $16 per share • September 1, 2019- repurchased 30,000 common shares for $14 per share and immediately cancelled them On July 1, 2019, GGI entered into a consulting agreement with Jackson Consulting Group (Jackson) to help GGI enter into the European market. One of the terms of the consulting agreement was that GGI was required to issue 35,000 shares to Jackson if GGI generated $100,000 of sales in Europe by the end of 2019. If this condition was met, the shares would be issued by GGI to Jackson on March 1, 2020. On November 1, 2019, GGI reached this milestone for sales generated in Europe. GGI's average and year-end share price for the year ended December 31, 2019, was $15. GGI is subject to tax at a rate of 19%. Its net income for the year ended December 31, 2019, totalled $1,601,000. During the year, GGI paid dividends of $4 per share on the cumulative preferred shares. Required: Calculate GGI's basic and diluted earnings per share for the year ended December 31, 2019. (13 marks) Gamer Gear Inc. (GGI) prepares its financial statements in accordance with IFRS. GGI's capital structure on December 31, 2018, included the following: • 300,000 common shares issued and outstanding • 100,000 cumulative preferred shares with an annual dividend of $2 per share - At the option of the holder, each preferred share can be converted into half of a common share at any time. The investor receives one common share for every two preferred shares tendered. • A stock option that grants the holder the right to purchase 9,000 common shares for $10 each at any time before December 31, 2030. • Bond – $2,000,000, 4.2%, semi-annual bonds maturing December 31, 2030. At the option of the holder, each $1,000 bond can be converted into eight common shares at any time before January 1, 2023. The bonds were issued at face value. During 2019, GGI entered into the following capital transactions: • April 1, 2019 – issued 50,000 common shares for $16 per share • September 1, 2019- repurchased 30,000 common shares for $14 per share and immediately cancelled them On July 1, 2019, GGI entered into a consulting agreement with Jackson Consulting Group (Jackson) to help GGI enter into the European market. One of the terms of the consulting agreement was that GGI was required to issue 35,000 shares to Jackson if GGI generated $100,000 of sales in Europe by the end of 2019. If this condition was met, the shares would be issued by GGI to Jackson on March 1, 2020. On November 1, 2019, GGI reached this milestone for sales generated in Europe. GGI's average and year-end share price for the year ended December 31, 2019, was $15. GGI is subject to tax at a rate of 19%. Its net income for the year ended December 31, 2019, totalled $1,601,000. During the year, GGI paid dividends of $4 per share on the cumulative preferred shares. Required: Calculate GGI's basic and diluted earnings per share for the year ended December 31, 2019. (13 marks)