Question 1

Calculate the incremental EPS for the following instrument:

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 B

Question 2

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

Accepted Answer

A) It means net income plus dividends on common and preferred shares. 
B) It means net income less dividends on preferred shares. 
C) It means net income plus dividends on common shares. 
D) It means net income less dividends on common and preferred shares. 
A) It means net income plus dividends on common and preferred shares. 
B) It means net income less dividends on preferred shares. 
C) It means net income plus dividends on common shares. 
D) It means net income less dividends on common and preferred shares. B

Question 3

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 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 not pro-rated for the diluted EPS calculation. 
B) When convertible securities are issued during the year,the income effect and share effect are 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. B

Question 4

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 5

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 6

Two different companies have many similarities,including the following:
? They both earned net income of $3,500,000 for the year ended December 31,2017;
? They are both subject to a 35% tax rate;
? The average price of the companies' ordinary shares during the year was $26;and
? Each company had 1,400,000 ordinary shares outstanding during the year.
They do have slightly different complex capital structures,however.Specifically:
? Company ACE had stock options outstanding the entire year that allowed employees to buy 50,000 ordinary shares for $20 each until December 31,2019.
? Company DUECE had $600,000 in 5% bonds maturing on December 31,2019 that were outstanding the entire year.Each $1,000 bond is convertible into 5 ordinary shares any time before expiry.
Required:
a.Calculate the basic EPS of both companies.
b.Prepare a schedule that sets out the income effect,share effect,and incremental EPS for each company's security that is convertible into ordinary shares.
c.Consider each company's POS and determine whether it is dilutive or antidilutive.

Accepted Answer

a.
Basic EPS for each company is the sam

Question 7

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 8

What is the meaning of "weighted average number of ordinary shares outstanding"?

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 basic 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 basic EPS calculation. 
D) This is the not used in the diluted EPS calculation.

Question 9

Tropical Island Inc.(TIl)was incorporated on January 1,2018.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 31,2018 was $1,600,000.TIl declares and pays a total of $68,000 in dividends.The series A preferred shares are cumulative and the series B preferred shares are non-cumulative.Series A must be fully paid their current entitlement before any monies are paid to the Series B shareholders.
Required:
Compute basic BPS.

Accepted Answer

@#IMG-DLM& 
Supporting comment-$68,000 in dividend

Question 10

Which statement is correct?

Accepted Answer

A) Share issuances decrease the EPS numerator. 
B) Stock splits have the same effect on EPS as share issuances. 
C) Share issuances increase number of shares. 
D) Share issuances decrease the EPS denominator. 
A) Share issuances decrease the EPS numerator. 
B) Stock splits have the same effect on EPS as share issuances. 
C) Share issuances increase number of shares. 
D) Share issuances decrease the EPS denominator.

Question 11

Summer Surprise Ltd.(SSL)was incorporated on January 1,2018.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 31,2018 was $500,000.SSL neither declares nor pays dividends during the year.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.
Required:
Compute basic BPS.

Accepted Answer

@#IMG-DLM& 
Supporting comment-Dividends are neith

Question 12

Calculate the share effect on the incremental EPS for the following instrument:

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

Question 13

For the year ended December 31,2017,Jovial Productions Inc.earned $13,000,000.Outstanding preferred shares included $1,500,000 in 9% cumulative preferred shares issued on January 1,2014 and 32,000 $160 non-cumulative preferred shares issued on January 1,2016 that are each entitled to dividends of $7 per annum.Dividends were neither declared nor paid on either class of the preferred shares in 2015 or 2016.On December 15,2017,the company declared and paid $140,000 of the dividends in arrears on the 9% cumulative preferred shares.
Required:
Determine the net income available to ordinary shareholders for the year ended December 31,2017.

Accepted Answer

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

Question 14

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 15

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

Accepted Answer

A) EPS does not provide decision-useful information to investors. 
B) EPS represents the ordinary share's market value. 
C) EPS represents the company's market value. 
D) EPS can be used to predict future earnings by analysts. 
A) EPS does not provide decision-useful information to investors. 
B) EPS represents the ordinary share's market value. 
C) EPS represents the company's market value. 
D) EPS can be used to predict future earnings by analysts.

Question 16

Explain why only in-the-money options need be considered in the diluted EPS calculations.

Accepted Answer

For purposes of computing diluted EPS,we

Question 17

Two different companies have many similarities,including the following:
∙ They both earned net income of $3,500,000 for the year ended December 31,2017;
∙ They are both subject to a 35% tax rate;
∙ The average price of the companies' ordinary shares during the year was $26;and
∙ Each company had 1,400,000 ordinary shares outstanding during the year.
They do have slightly different complex capital structures,however.Specifically:
∙ Company Black had stock options outstanding the entire year that allowed employees to buy 10,000 ordinary shares for $22 each between January 1,2018 and December 31,2019.
∙ Company Clark had $4,000,000 in 4% non-cumulative preferred shares outstanding the entire year.Each $100 share is convertible into three ordinary shares.Dividends were not declared in 2017.
Required:
a.Calculate the basic EPS of both companies.
b.Prepare a schedule that sets out the income effect,share effect,and incremental EPS for each company's security that is convertible into ordinary shares.
c.Consider each company's POS and determine whether it is dilutive or antidilutive.

Accepted Answer

a.
Basic EPS for each company is the sam

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

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

Accepted Answer

The need for basic EPS is simply to incr

Question 20

Which statement is correct?

Accepted Answer

A) Diluted EPS assumes that all dilutive securities are converted. 
B) Diluted EPS assumes that all antidilutive 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 antidilutive 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.

Calculate the incremental EPS for the following instrument:

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

Which statement is correct?

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

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

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

What is the meaning of "weighted average number of ordinary shares outstanding"?

Which statement is correct?

Calculate the share effect on the incremental EPS for the following instrument:

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

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

Explain why only in-the-money options need be considered in the diluted EPS calculations.

Which statement is correct?

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

Which statement is correct?

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

Accounting Changes

Filters

Exam 15: Earnings Per Share

Calculate the incremental EPS for the following instrument:

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

Which statement is correct?

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

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

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

What is the meaning of "weighted average number of ordinary shares outstanding"?

Which statement is correct?

Calculate the share effect on the incremental EPS for the following instrument:

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

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

Explain why only in-the-money options need be considered in the diluted EPS calculations.

Which statement is correct?

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

Which statement is correct?

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

Accounting Changes

Filters