Question 1

What is the meaning of "net income attributable to ordinary shareholders"?

Accepted Answer

A) This is not used in the EPS calculation. 
B) This refers to the numerator of the EPS calculation. 
C) This refers to the denominator of the EPS calculation. 
D) This is the not used in the diluted EPS calculation. 
A) This is not used in the EPS calculation. 
B) This refers to the numerator of the EPS calculation. 
C) This refers to the denominator of the EPS calculation. 
D) This is the not used in the diluted EPS calculation.

Question 2

Tropical Island Inc.(TIl)was incorporated on January I,2014.At that time it issued 300,000 ordinary shares; 10,000,$10,8% preferred shares "A"; and 100,000,$10,9% preferred shares "B." Net income for the year ended December 31,2014 was $1,600,000.TIl declares and pays a total of $68,000 in dividends.Both the preferred shares series A and B are non-cumulative in nature.Series A must be fully paid their current entitlement before any monies are paid to the Series B shareholders.
Requirement:
Compute basic BPS.

Accepted Answer

Supporting comment-$68,000 in dividends

Question 3

Which statement is correct about earnings per share (EPS)?

Accepted Answer

A) A company's total earning is more meaningful than its EPS. 
B) EPS represents the total amount of earnings of a company. 
C) EPS represents an ordinary share's interest in the company. 
D) The EPS is directly correlated with the company's stock price. 
A) A company's total earning is more meaningful than its EPS. 
B) EPS represents the total amount of earnings of a company. 
C) EPS represents an ordinary share's interest in the company. 
D) The EPS is directly correlated with the company's stock price.

Question 4

Summer Surprise Ltd.(SSL)was incorporated on January 1,2014.At that time,it issued 210,000 ordinary shares; 95,000,$65,2% preferred shares "A"; and 85,000,$65,4% preferred shares "B." Net income for the year ended December 31,2014 was $500,000.SSL neither declares nor pays dividends during the year.iii.Both the preferred shares series A and B are non-cumulative in nature.Series A must be fully paid their current entitlement before any monies are paid to the Series B shareholders.
Requirement:
Compute basic BPS.

Accepted Answer

Supporting comment-Dividends are neither

Question 5

For the year ended December 31,2011,Harvest Productions Inc.earned $4,000,000.Outstanding preferred shares included $400,000 in 3% cumulative preferred shares issued on January 1,2010 and $500,000 in 2% non-cumulative preferred shares issued on January 1,2011.Dividends on the cumulative preferred shares were not declared in 2010.
a.On December 15,2011,Harvest declared and paid $24,000 in dividends on the 3% cumulative shares including the arrears.Harvest also declared and paid the $10,000 dividends on the non-cumulative shares.
b.Harvest did not declare any dividends during 2011.
c.On December 15,2011,Harvest declared $10,000 in dividends on the non-cumulative preferred shares,payable on January 15,2012.Dividends on the cumulative preferred shares are neither declared nor paid.
Requirement:
Determine the net income available to ordinary shareholders for the year ended December 31,2011.

Accepted Answer

The yearly dividend entitlemen

Question 6

For the year ended December 31,2011,Harvest Productions Inc.earned $4,000,000.Outstanding preferred shares included $400,000 in 3% cumulative preferred shares issued on January 1,2010 and $500,000 in 2% non-cumulative preferred shares issued on January 1,2011.Dividends on the cumulative preferred shares were not declared in 2010.On December 15,2011,Harvest declared $10,000 in dividends on the non-cumulative preferred shares,payable on January 15,2012.Dividends on the cumulative preferred shares are neither declared nor paid.
Requirement:
Determine the net income available to ordinary shareholders for the year ended December 31,2011.

Accepted Answer

The yearly dividend entitlement on the c

Question 7

Which statement is correct?

Accepted Answer

A) Diluted EPS assumes that all dilutive securities are converted. 
B) Diluted EPS assumes that all anti-dilutive and dilutive securities are converted. 
C) Diluted EPS assumes that all ordinary securities are converted. 
D) Diluted EPS assumes that all ordinary and dilutive securities are converted. 
A) Diluted EPS assumes that all dilutive securities are converted. 
B) Diluted EPS assumes that all anti-dilutive and dilutive securities are converted. 
C) Diluted EPS assumes that all ordinary securities are converted. 
D) Diluted EPS assumes that all ordinary and dilutive securities are converted.

Question 8

Tropical Island Inc.(TIl)was incorporated on January I,2014.At that time it issued 300,000 ordinary shares; 10,000,$10,8% preferred shares "A"; and 100,000,$10,9% preferred shares "B." Net income for the year ended December 31,2014 was $1,600,000.TIl declares and pays a total of $68,000 in dividends.Both the preferred shares series A and B are cumulative in nature.Series A must be fully paid their current entitlement as well as any arrears before any monies are paid to the Series B shareholders.
Requirement:
Compute basic BPS.

Accepted Answer

Supporting comment-$68,000 in dividends

Question 9

Explain the difference between basic and diluted EPS.

Accepted Answer

Basic EPS communicates "ownership" of ea

Question 10

Sad Man Inc.had 220,000 ordinary shares outstanding in all of 2013.On January 1,2011,Sad issued at par $400,000 in 10% bonds maturing on January 1,2019.Each $1,000 bond is convertible into 9 ordinary shares.Assume that the effective interest rate is 10%.There are 5,000 outstanding cumulative preferred shares that are each entitled to an annual dividend of $0.20.Dividends were not declared or paid during 2013.Each preferred share is convertible into three ordinary shares.Sad's net income for the year ended December 31,2013 was $250,000.Its income tax rate was 35%.
Requirements:
a.Calculate Sad's basic EPS for 2013.
b.Are the convertible bonds dilutive or anti-dilutive in nature? The convertible preferred shares?
c.Calculate Sad's diluted EPS for 2013.

Accepted Answer

a.Calculation of bas

Question 11

Explain why dividends to preferred shareholders are adjusted in the numerator of the EPS calculation.

Accepted Answer

We need to adjust for dividends on prefe

Question 12

What is the meaning of "in the money options"?

Accepted Answer

A) An option is in-the-money when the market price means that it will expire un-exercised. 
B) An option is in-the-money if the market price of the share equals the exercise price. 
C) An option is in-the-money if the market price of the share is less than the exercise price. 
D) An option is in-the-money if the market price of the share exceeds the exercise price. 
A) An option is in-the-money when the market price means that it will expire un-exercised. 
B) An option is in-the-money if the market price of the share equals the exercise price. 
C) An option is in-the-money if the market price of the share is less than the exercise price. 
D) An option is in-the-money if the market price of the share exceeds the exercise price.

Question 13

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)? $$\begin{array} { | l | r | } 
\hline \text { Ordinary shares, January 1,2013 } & 100,000 \
\hline \text { Shares issued, March 1, 2013 } & 60,000 \
\hline\text { Shares repurchased, June 1, 2013 and } & \
\text { held as treasury shares } & 10,000 \
\hline \text { Shares issued, Nov 1, 2013 } & 90,000 \
\hline
\end{array}$$

Accepted Answer

A) 104,170 
B) 159,167 
C) 164,830 
D) 190,000 
A) 104,170 
B) 159,167 
C) 164,830 
D) 190,000

Question 14

Explain why the IASB requires the disclosure of basic and diluted EPS.

Accepted Answer

The need for basic EPS is simply to incr

Question 15

Use the following information to calculate the "net income available to ordinary shareholders": $\begin{array}{|l|r|}
\hline \text { Net income } & 2,000,000 \
\hline \text { Dividends on cumulative preferred shares } & 40,000 \
\hline \text { Dividends on non-cumulative preferred shares } & 100,000 \
\hline \text { Dividends declared in 2013: } & \
\text { - Common shares } & 50,000 \
\text { - Cumulative preferred shares } & 80,000 \
\text { - Non-cumulative preferred shares } & 100,000 \
\hline \text { Dividends paid in 2013: } &  \
\text { - Common shares } &30,000 \
\text { - Cumulative preferred shares } & 50,000  \
\text { - Non-cumulative preferred shares } &0\\hline
\end{array}$

Accepted Answer

A) $1,820,000 
B) $1,860,000 
C) $1,950,000 
D) $1,960,000 
A) $1,820,000 
B) $1,860,000 
C) $1,950,000 
D) $1,960,000

Question 16

Accu Tech Renovations Corp.(ATRC)was incorporated on January I,2014.At that time it issued 100,000 ordinary shares; 80,000,$20,3% preferred shares "A"; and 40,000,$20,6% preferred shares "B." Net income for the year ended December 31,2014 was $1,800,000.ATRC declares and pays total of $238,000 in dividends.Both the preferred shares series A and B are cumulative in nature.Series A must be fully paid their current entitlement as well as any arrears before any monies are paid to the Series B shareholders.
Requirement:
Compute basic BPS.

Accepted Answer

Supporting comment-238,000 in dividends

Question 17

Ned Company reported the following information for its fiscal year: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 500,000 \
\hline \text { Preferred dividends } & 30,000 \
\hline\text { Common share dividends }&\text { 20,000 }\
\hline \text { Preferred shares are cumulative and carry an annual dividend of } & 10,000 \
\hline
\end{array}$$ The preferred dividends listed above include the current year and prior accumulated dividends.What is the amount of net income available to common shareholders?

Accepted Answer

A) $440,000 
B) $450,000 
C) $470,000 
D) $490,000 
A) $440,000 
B) $450,000 
C) $470,000 
D) $490,000

Question 18

Which statement is correct?

Accepted Answer

A) Diluted EPS will always be less than basic EPS. 
B) Diluted EPS will always be greater than basic EPS. 
C) Diluted EPS will always be equal to EPS. 
D) Diluted EPS will be less than or equal to basic EPS. 
A) Diluted EPS will always be less than basic EPS. 
B) Diluted EPS will always be greater than basic EPS. 
C) Diluted EPS will always be equal to EPS. 
D) Diluted EPS will be less than or equal to basic EPS.

Question 19

Calculate the share effect on the incremental EPS for the following instrument: $$\begin{array}{l}
\begin{array} {| l | r |} 
\hline\text { Convertible bonds outstanding, yield of } 5 \% \text { and }\
 \text { coupon rate of } 6 \% & \$ 2,000,000 \
\hline \text { Issue date } & \text { January } 1,2013 \
\hline \text { Maturity date } & \text { December } 31,2020 \
\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & 40 \text { ordinary shares } \
\hline \text { Income tax rate } & 25 \% \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) 0.63 
B) 1.88 
C) 75,000 
D) 80,000 
A) 0.63 
B) 1.88 
C) 75,000 
D) 80,000

Question 20

Which statement is correct about the "if-converted" method for EPS?

Accepted Answer

A) This method assumes the convertible security is converted into ordinary shares at the end of the fiscal period. 
B) This method assumes the convertible security is converted into ordinary shares at the beginning of the fiscal period. 
C) This method assumes the convertible security is converted into ordinary shares evenly over the fiscal period. 
D) This method assumes the convertible security is converted into ordinary shares at the mid-point of the fiscal period. 
A) This method assumes the convertible security is converted into ordinary shares at the end of the fiscal period. 
B) This method assumes the convertible security is converted into ordinary shares at the beginning of the fiscal period. 
C) This method assumes the convertible security is converted into ordinary shares evenly over the fiscal period. 
D) This method assumes the convertible security is converted into ordinary shares at the mid-point of the fiscal period.

What is the meaning of "net income attributable to ordinary shareholders"?

Which statement is correct about earnings per share (EPS)?

Which statement is correct?

Explain the difference between basic and diluted EPS.

Explain why dividends to preferred shareholders are adjusted in the numerator of the EPS calculation.

What is the meaning of "in the money options"?

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)? Ordinary shares, January 1,2013 100,000 Shares issued, March 1, 2013 60,000 Shares repurchased, June 1, 2013 and held as treasury shares 10,000 Shares issued, Nov 1, 2013 90,000

Explain why the IASB requires the disclosure of basic and diluted EPS.

Which statement is correct?

Calculate the share effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 5\% and coupon rate of 6\% \ 2,000,000 Issue date January 1,2013 Maturity date December 31,2020 Conversion rate for each \ 1,000 bond 40 ordinary shares Income tax rate 25\%

Which statement is correct about the "if-converted" method for EPS?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Filters

Exam 15: Earnings Per Share

What is the meaning of "net income attributable to ordinary shareholders"?

Which statement is correct about earnings per share (EPS)?

Which statement is correct?

Explain the difference between basic and diluted EPS.

Explain why dividends to preferred shareholders are adjusted in the numerator of the EPS calculation.

What is the meaning of "in the money options"?

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)? Ordinary shares, January 1,2013 100,000 Shares issued, March 1, 2013 60,000 Shares repurchased, June 1, 2013 and held as treasury shares 10,000 Shares issued, Nov 1, 2013 90,000

Explain why the IASB requires the disclosure of basic and diluted EPS.

Which statement is correct?

Calculate the share effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 5\% and coupon rate of 6\% \ 2,000,000 Issue date January 1,2013 Maturity date December 31,2020 Conversion rate for each \ 1,000 bond 40 ordinary shares Income tax rate 25\%

Which statement is correct about the "if-converted" method for EPS?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Accounting for Income Taxes

Pensions and Other Employee Future Benefits

Accounting for Leases

Statement of Cash Flows

Filters