Question 1

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

Accepted Answer

A) EPS does not need to be disclosed under IFRS. 
B) EPS needs to be disclosed under IFRS. 
C) EPS is calculated for preferred shares. 
D) EPS is a ratio used to assess leverage. 
A) EPS does not need to be disclosed under IFRS. 
B) EPS needs to be disclosed under IFRS. 
C) EPS is calculated for preferred shares. 
D) EPS is a ratio used to assess leverage.

Question 2

For the year ended December 31,2015,Jovial Productions Inc.earned $13,000,000.Outstanding preferred shares included $1,500,000 in 9% cumulative preferred shares issued on January 1,2012 and 32,000 $160 non-cumulative preferred shares issued on January 1,2014 that are each entitled to dividends of $7 per annum.Dividends were neither declared nor paid on either class of the preferred shares in 2013 or 2014.On December 15,2015,the company declared and paid the $270,000 dividends in arrears on the 9% cumulative preferred shares.The company also declared and paid $224,000 dividends on the non-cumulative preferred shares.
Requirement:
Determine the net income available to ordinary shareholders for the year ended December 31,2015.

Accepted Answer

The yearly dividend entitlement on the c

Question 3

Which statement is correct?

Accepted Answer

A) Dilutive potential ordinary shares,if converted,will decrease EPS or decrease the loss per share from continuing operations. 
B) Dilutive potential ordinary shares,if converted,will increase EPS or increase the loss per share from continuing operations. 
C) Anti-dilutive potential ordinary shares,if converted,will increase EPS or decrease the loss per share from continuing operations. 
D) Anti-dilutive potential ordinary shares,if converted,will decrease EPS or decrease the loss per share from continuing operations. 
A) Dilutive potential ordinary shares,if converted,will decrease EPS or decrease the loss per share from continuing operations. 
B) Dilutive potential ordinary shares,if converted,will increase EPS or increase the loss per share from continuing operations. 
C) Anti-dilutive potential ordinary shares,if converted,will increase EPS or decrease the loss per share from continuing operations. 
D) Anti-dilutive potential ordinary shares,if converted,will decrease EPS or decrease the loss per share from continuing operations.

Question 4

Which statement is correct?

Accepted Answer

A) When convertible securities are redeemed during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
B) When convertible securities are issued during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
C) When the right to convert convertible securities expires during the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
D) When convertible securities are issued at the beginning of the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
A) When convertible securities are redeemed during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
B) When convertible securities are issued during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
C) When the right to convert convertible securities expires during the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
D) When convertible securities are issued at the beginning of the year,the income effect and share effect are pro-rated for the diluted EPS calculation.

Question 5

Which statement is correct?

Accepted Answer

A) When convertible securities are redeemed during the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
B) When convertible securities are issued during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
C) When convertible securities are issued at the beginning of the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
D) When the right to convert convertible securities expires during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
A) When convertible securities are redeemed during the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
B) When convertible securities are issued during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation. 
C) When convertible securities are issued at the beginning of the year,the income effect and share effect are pro-rated for the diluted EPS calculation. 
D) When the right to convert convertible securities expires during the year,the income effect and share effect are not pro-rated for the diluted EPS calculation.

Question 6

Calculate the incremental EPS for the following instrument: $\begin{array}{|l|r|}
\hline\begin{array}{l}
\text { Convertible bonds outstanding, effective yield } \
\text { of } 7 \% \text { and coupon rate of } 6 \%
\end{array} & \$ 2,000,000 \
\hline \text { Issue date } & \text { January 1, 2019 } \
\hline \text { Maturity date } & \text { December 31, 2018 } \
\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & \text { 20 ordinary share } \
\hline \text { Income tax rate } & 25 \%\\hline
\end{array}$

Accepted Answer

A) 0.75 
B) 0.88 
C) 2.25 
D) 2.63 
A) 0.75 
B) 0.88 
C) 2.25 
D) 2.63

Question 7

Which statement is correct?

Accepted Answer

A) A simple capital structure includes potentially dilutive securities. 
B) A simple capital structure excludes potentially dilutive securities. 
C) EPS applies only to a company with a simple capital structure. 
D) A company with a simple capital structure does not need to calculate EPS. 
A) A simple capital structure includes potentially dilutive securities. 
B) A simple capital structure excludes potentially dilutive securities. 
C) EPS applies only to a company with a simple capital structure. 
D) A company with a simple capital structure does not need to calculate EPS.

Question 8

Which statement is correct about "weighted average number of ordinary shares outstanding"?

Accepted Answer

A) Treasury shares that are cancelled are adjusted in this calculation. 
B) Treasury shares that are not cancelled are adjusted in this calculation. 
C) Treasury shares that are repurchased are adjusted in this calculation. 
D) Treasury shares are ignored for purposes of this calculation. 
A) Treasury shares that are cancelled are adjusted in this calculation. 
B) Treasury shares that are not cancelled are adjusted in this calculation. 
C) Treasury shares that are repurchased are adjusted in this calculation. 
D) Treasury shares are ignored for purposes of this calculation.

Question 9

Which of the following is correct about the difference between basic earnings per share (EPS)and diluted earnings per share?

Accepted Answer

A) Basic EPS uses total common shares outstanding,whereas diluted EPS uses the weighted-average number of common shares. 
B) Basic EPS is not a required disclosure,whereas diluted EPS is required disclosure. 
C) Basic EPS is not adjusted for the potential dilutive effects of complex financial structures,whereas diluted EPS is adjusted. 
D) Basic EPS uses comprehensive income in its calculation,whereas diluted EPS does not. 
A) Basic EPS uses total common shares outstanding,whereas diluted EPS uses the weighted-average number of common shares. 
B) Basic EPS is not a required disclosure,whereas diluted EPS is required disclosure. 
C) Basic EPS is not adjusted for the potential dilutive effects of complex financial structures,whereas diluted EPS is adjusted. 
D) Basic EPS uses comprehensive income in its calculation,whereas diluted EPS does not.

Question 10

Calculate the incremental EPS for the following instrument: $$\begin{array}{l}
\begin{array} {| l | r |} 
\hline\text { Convertible bonds outstanding, yield of } 3 \% \text { and }\
 \text { coupon rate of } 3 \% & \$ 5,000,000 \
\hline \text { Issue date } & \text { January } 1,2015 \
\hline \text { Maturity date } & \text { December } 31,2022 \
\hline \text { Conversion rate for each } \$ 1,000 \text { bond } & 25 \text { ordinary shares } \
\hline \text { Income tax rate } & 30 \% \
\hline
\end{array}
\end{array}$$

Accepted Answer

A) $0.36 
B) $0.84 
C) $40.00 
D) $105,000 
A) $0.36 
B) $0.84 
C) $40.00 
D) $105,000

Question 11

Explain how the dividends on cumulative preferred shares are adjusted in the EPS calculation.What is the underlying logic for this adjustment?

Accepted Answer

For cumulative preferred shares,deduct t

Question 12

Which statement is correct about basic EPS?

Accepted Answer

A) It indicates the net income before tax attributable to a company's ordinary shares. 
B) It indicates the net income before tax attributable to a company's preferred shares. 
C) It indicates the net income attributable to a company's preferred shares. 
D) It indicates the net income attributable to a company's ordinary shares. 
A) It indicates the net income before tax attributable to a company's ordinary shares. 
B) It indicates the net income before tax attributable to a company's preferred shares. 
C) It indicates the net income attributable to a company's preferred shares. 
D) It indicates the net income attributable to a company's ordinary shares.

Question 13

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

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 14

Calculate the incremental EPS for the following instrument: $\begin{array}{|l|r|}
\hline\text { Face value of } 10,000 \text { preferred shares with } & \
\text { dividend rate of } 5 \% & \$ 5,000,000 \
\hline \text { Conversion rate for each preferred share } & 25 \text { ordinary shares } \
\hline \text { Income tax rate } & 30 \%\\hline
\end{array}$

Accepted Answer

A) $0.30 
B) $0.70 
C) $1.00 
D) $2.00 
A) $0.30 
B) $0.70 
C) $1.00 
D) $2.00

Question 15

For stock splits and stock dividends,while it is possible to state the number of shares as beginning-of-year equivalents,it makes more sense to use end-of-year equivalents because financial statement readers are evaluating EPS after the end of the year.Explain why the adjustment for stock splits and stock dividends is standardized.

Accepted Answer

The reasons for standardizing the adjust

Question 16

What is the meaning of "at-the-money options"?

Accepted Answer

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

Question 17

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 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-238,000 in dividends

Question 18

Which statement is correct about the "income effect" on EPS?

Accepted Answer

A) This is the incremental before-tax income available to ordinary shareholders. 
B) This is the incremental after-tax income available to ordinary shareholders. 
C) This is the incremental number of ordinary shares outstanding before conversion. 
D) This is the incremental number of ordinary shares outstanding after conversion. 
A) This is the incremental before-tax income available to ordinary shareholders. 
B) This is the incremental after-tax income available to ordinary shareholders. 
C) This is the incremental number of ordinary shares outstanding before conversion. 
D) This is the incremental number of ordinary shares outstanding after conversion.

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

Which statement is correct?

Which statement is correct?

Which statement is correct?

Calculate the incremental EPS for the following instrument: Convertible bonds outstanding, effective yield of 7\% and coupon rate of 6\% \ 2,000,000 Issue date January 1, 2019 Maturity date December 31, 2018 Conversion rate for each \ 1,000 bond 20 ordinary share Income tax rate 25\%

Which statement is correct?

Which statement is correct about "weighted average number of ordinary shares outstanding"?

Which of the following is correct about the difference between basic earnings per share (EPS)and diluted earnings per share?

Calculate the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 3\% and coupon rate of 3\% \ 5,000,000 Issue date January 1,2015 Maturity date December 31,2022 Conversion rate for each \ 1,000 bond 25 ordinary shares Income tax rate 30\%

Explain how the dividends on cumulative preferred shares are adjusted in the EPS calculation.What is the underlying logic for this adjustment?

Which statement is correct about basic EPS?

Calculate the share effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 5\% and coupon rate of 5\% \ 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\%

Calculate the incremental EPS for the following instrument: Face value of 10,000 preferred shares with dividend rate of 5\% \ 5,000,000 Conversion rate for each preferred share 25 ordinary shares Income tax rate 30\%

What is the meaning of "at-the-money options"?

Which statement is correct about the "income effect" on 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

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

Which statement is correct?

Which statement is correct?

Which statement is correct?

Calculate the incremental EPS for the following instrument: Convertible bonds outstanding, effective yield of 7\% and coupon rate of 6\% \ 2,000,000 Issue date January 1, 2019 Maturity date December 31, 2018 Conversion rate for each \ 1,000 bond 20 ordinary share Income tax rate 25\%

Which statement is correct?

Which statement is correct about "weighted average number of ordinary shares outstanding"?

Which of the following is correct about the difference between basic earnings per share (EPS)and diluted earnings per share?

Calculate the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 3\% and coupon rate of 3\% \ 5,000,000 Issue date January 1,2015 Maturity date December 31,2022 Conversion rate for each \ 1,000 bond 25 ordinary shares Income tax rate 30\%

Explain how the dividends on cumulative preferred shares are adjusted in the EPS calculation.What is the underlying logic for this adjustment?

Which statement is correct about basic EPS?

Calculate the share effect on the incremental EPS for the following instrument: Convertible bonds outstanding, yield of 5\% and coupon rate of 5\% \ 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\%

Calculate the incremental EPS for the following instrument: Face value of 10,000 preferred shares with dividend rate of 5\% \ 5,000,000 Conversion rate for each preferred share 25 ordinary shares Income tax rate 30\%

What is the meaning of "at-the-money options"?

Which statement is correct about the "income effect" on 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