Question 1

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

Accepted Answer

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

Question 2

Which statement is correct respecting the presentation of discontinued operations on EPS?

Accepted Answer

A) EPS from discontinued operations must be presented on the face of the income statement. 
B) EPS from discontinued operations may either be presented on the face of the income statement or may be disclosed in the financial statements. 
C) ASPE requires EPS from discontinued operations to be presented on the face of the income statement. 
D) IFRS does not require basic EPS to be shown separately for continuing operations and for discontinued operations. 
A) EPS from discontinued operations must be presented on the face of the income statement. 
B) EPS from discontinued operations may either be presented on the face of the income statement or may be disclosed in the financial statements. 
C) ASPE requires EPS from discontinued operations to be presented on the face of the income statement. 
D) IFRS does not require basic EPS to be shown separately for continuing operations and for discontinued operations.

Question 3

Which statement is correct about basic EPS?

Accepted Answer

A) It is an indicator of profitability that communicates ownership of earnings attributable to a company's dilutive shares. 
B) It is an indicator of profitability that communicates ownership of earnings attributable to a company's ordinary shares. 
C) It indicates the market price attributable to a company's ordinary shares. 
D) It indicates the market price attributable to a company's dilutive shares. 
A) It is an indicator of profitability that communicates ownership of earnings attributable to a company's dilutive shares. 
B) It is an indicator of profitability that communicates ownership of earnings attributable to a company's ordinary shares. 
C) It indicates the market price attributable to a company's ordinary shares. 
D) It indicates the market price attributable to a company's dilutive shares.

Question 4

Which statement is correct about the "weighted average number of ordinary shares outstanding" (WASO)?

Accepted Answer

A) It is used only in the numerator of the EPS calculation. 
B) The weighted average is the number of shares outstanding at the beginning of the year. 
C) The weighted average accounts for changes in shares issued or cancelled during the year. 
D) It is used only in the denominator of the diluted EPS calculation. 
A) It is used only in the numerator of the EPS calculation. 
B) The weighted average is the number of shares outstanding at the beginning of the year. 
C) The weighted average accounts for changes in shares issued or cancelled during the year. 
D) It is used only in the denominator of the diluted EPS calculation.

Question 5

For the year ended December 31, 2021, Jovial Productions Inc. earned $13,000,000. Outstanding preferred shares included $1,500,000 in 9% cumulative preferred shares issued on January 1, 2018 and 32,000 $160 non-cumulative preferred shares issued on January 1, 2020 that are each entitled to dividends of $7 per annum. Dividends were neither declared nor paid on either class of the preferred shares in 2019 or 2020. On December 15, 2021, 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.
Required:
Determine the net income available to ordinary shareholders for the year ended December 31, 2021.

Accepted Answer

@#IMG-DLM& The yearly dividend entitlement on the

Question 6

Calculate the incremental EPS for the following instrument: Face value of 10,000 preferred shares with dividend rate of 5%
$1,000,000
Conversion rate for each preferred share
25 ordinary shares
Income tax rate
30%

Accepted Answer

A) $0.14 
B) $0.20 
C) $1.40 
D) $2.00 
A) $0.14 
B) $0.20 
C) $1.40 
D) $2.00

Question 7

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

Question 8

Explain the "income effect" and "share effect" as they apply to the calculation of incremental EPS.

Accepted Answer

Income effect: The income effect indicat

Question 9

Which statement is correct about potential ordinary shares (POS)?

Accepted Answer

A) Dilutive POS decrease EPS. 
B) Dilutive POS increase EPS. 
C) Anti-dilutive POS decrease EPS. 
D) Anti-dilutive POS are included in EPS. 
A) Dilutive POS decrease EPS. 
B) Dilutive POS increase EPS. 
C) Anti-dilutive POS decrease EPS. 
D) Anti-dilutive POS are included in EPS.

Question 10

Which statement is correct about the "weighted average number of ordinary shares outstanding" (WASO)?

Accepted Answer

A) Stock repurchases do not impact the WASO. 
B) The actual date of share issuances is ignored in the WASO. 
C) The actual date of stock splits is ignored in the WASO. 
D) Stock dividends do not impact the WASO. 
A) Stock repurchases do not impact the WASO. 
B) The actual date of share issuances is ignored in the WASO. 
C) The actual date of stock splits is ignored in the WASO. 
D) Stock dividends do not impact the WASO.

Question 11

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, 2021
Maturity date
December 31, 2028
Conversion rate for each $1,000 bond
40 ordinary shares
Income tax rate
25%

Accepted Answer

A) 0.63 
B) 0.94 
C) 75,000 
D) 80,000 
A) 0.63 
B) 0.94 
C) 75,000 
D) 80,000

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

Which statement is correct respecting the presentation of discontinued operations on EPS?

Which statement is correct about basic EPS?

Which statement is correct about the "weighted average number of ordinary shares outstanding" (WASO)?

Calculate the incremental EPS for the following instrument: Face value of 10,000 preferred shares with dividend rate of 5% $1,000,000 Conversion rate for each preferred share 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?

Explain the "income effect" and "share effect" as they apply to the calculation of incremental EPS.

Which statement is correct about potential ordinary shares (POS)?

Which statement is correct about the "weighted average number of ordinary shares outstanding" (WASO)?

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, 2021 Maturity date December 31, 2028 Conversion rate for each $1,000 bond 40 ordinary shares Income tax rate 25%

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Pensions and Other Employee Future Benefits

Accounting for Leases

Accounting for Income Taxes

Accounting Changes

Statement of Cash Flows

Filters

Exam 5: Earnings Per Share

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

Which statement is correct respecting the presentation of discontinued operations on EPS?

Which statement is correct about basic EPS?

Which statement is correct about the "weighted average number of ordinary shares outstanding" (WASO)?

Calculate the incremental EPS for the following instrument: Face value of 10,000 preferred shares with dividend rate of 5% $1,000,000 Conversion rate for each preferred share 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?

Explain the "income effect" and "share effect" as they apply to the calculation of incremental EPS.

Which statement is correct about potential ordinary shares (POS)?

Which statement is correct about the "weighted average number of ordinary shares outstanding" (WASO)?

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, 2021 Maturity date December 31, 2028 Conversion rate for each $1,000 bond 40 ordinary shares Income tax rate 25%

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Pensions and Other Employee Future Benefits

Accounting for Leases

Accounting for Income Taxes

Accounting Changes

Statement of Cash Flows

Filters