intermediate Financial Reporting II

Problem 05 Earnings per Share (EPS) Concepts 8 Mark Indicate which of the following types of securities would be included in the calculation of "basic earnings per share." and which would be included in the calculation of "diluted earnings per share." Place a "B" before those which affect only basic EPS. a "D" before those which affect only diluted EPS. a "BD" before those which affect both basic and diluted EPS. and an "N" before those securities which do not affect EPS calculations. Assume that. where applicable. the securities are dilutive. 1. Notes payable 2. Executive stock options 3. Convertible bonds 4. Cumulative. nonconvertible preferred shares 5. Warrants to purchase additional common sh ares 6. Common shares 7. Nonconvenible bonds 8. Convertible preferred shares Problem D-B Convertible Bonds 10 Mark On January 1. 2020. Charlie Corp. issued $5 .000.000 (par value) 8%. 10-year convertible bonds at par. Interest is to be paid annually on December 31. Each $10.000 bond carries the right to purchase 100 Charlie common shares for $20 each during the life of the bond. The current market rate for similar non-convertible bonds is 9%. In stru ctl on s a. Calculate how much of the bond proceeds to allocate to the bond and how much to the option. Charlie adheres to IFRS. b. Prepare thejournal entry to record the issuance ofthe bond