Question:

Question: Connie Lam, the controller at Thompson Corporation, a public company, is currently preparing the calculations of basic and diluted earnings per share for Thompson's nancial statements. Selected nancial information for the year ended December 31, 2022, is shown below. Thompson Corporation Selected Statement of Financial Position Information As of December 31, 2022 Equity Share capitalpreference, 6% cumulative, convertible, $100 $1,250,000 par, 100,000 shares authorized, 12,500 shares issued and outstanding Share capitalordinary, $1 par, 1,000,000 shares authorized, 620,000 620,000 shares issued and outstanding Share premium (includes any amounts for options and 4,000,000 conversions) Retained earnings 6,000, 000 Total equity $11,870,000 Long-term debt Notes payable, 10% $1,000,000 Convertible bonds payable (A) 5,000,000 Convertible bonds payable (B) 6,000,000 Total long-term debt $ 12,000,000 Additional information: 1. On January 1, 2022, Thompson had 200,000 ordinary shares outstanding. During 2022, it had the following transactions that affected the number of ordinary shares: February 1 Acquired 40,000 treasury shares. May 1 Reissued 20,000 treasury shares. July 1 Issued a 10% share dividend on ordinary shares. October 1 A 3-for-1 split of ordinary shares became effective. December 31 Issued 26,000 ordinary shares for cash. The 6% cumulative, convertible preference shares were issued at par in 2018. Each preference share is convertible into four ordinary shares (adjusted for share dividend and share split). Thompson's outstanding and vested options were granted to five key executives on July 1, 2018, to purchase 200,000 shares at $20 per share. No options were exercised during 2022. The average market price for the ordinary shares during year 2022 was $25 per share. The convertible bonds were issued in 2017 and 2019. Both convertible bonds are convertible into ordinary shares at 100 shares per $1,000 bond (adjusted for share dividend and share split). The interest on the liability component of the convertible bonds A for 2022 was $450,000. An interest expense of $360,000 on the liability component of the convertible bonds B was recorded for 2022. 5. No preference dividends were declared in 2022. 6. Net income for 2022 was $1,500,000, and the average income tax rate is 20%. Required: 1) For the year ended December 31, 2022, calculate the following ratios for Thompson Corporation. a. Basic earnings per share. b. Diluted earnings per share. (Round earnings per Share to the nearest cent. Show all necessary computations.) 2) Which security(securities) is(are) not included in the calculation of diluted EPS for the year ended December 31, 2022? Explain why