Question 1

Use the following information to calculate the "net income available to ordinary shareholders":

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 2

Which statement is correct?

Accepted Answer

A) Out of the money stock options are the most dilutive. 
B) Convertible bonds are the most dilutive. 
C) Convertible preferred shares are the most dilutive. 
D) In the money stock options are the most dilutive. 
A) Out of the money stock options are the most dilutive. 
B) Convertible bonds are the most dilutive. 
C) Convertible preferred shares are the most dilutive. 
D) In the money stock options are the most dilutive.

Question 3

Calculate the incremental EPS for the following instrument:

Accepted Answer

A) 1.05 
B) 1.88 
C) 40,000 
D) 3.15 
A) 1.05 
B) 1.88 
C) 40,000 
D) 3.15

Question 4

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.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-$68,000 in dividend

Question 5

Which statement is correct about basic EPS?

Accepted Answer

A) It is calculated on the shares outstanding at the beginning of the year. 
B) It is calculated on the shares outstanding at the end of the year. 
C) It is calculated on the shares issued during the year. 
D) It is calculated on the shares outstanding during the year. 
A) It is calculated on the shares outstanding at the beginning of the year. 
B) It is calculated on the shares outstanding at the end of the year. 
C) It is calculated on the shares issued during the year. 
D) It is calculated on the shares outstanding during the year.

Question 6

Traditional Bathrooms Inc.(TBI)had 80,000 ordinary shares outstanding on January 1,2017.Transactions throughout 2017 affecting its shareholdings follow.
∙ February 1: TBI issued 200,000,$10,cumulative 10% preferred shares.
∙ March 1: TBI issued 40,000 ordinary shares.
∙ April l: TBI declared and issued a 8% stock dividend on the ordinary shares.
∙ July 1: TBI repurchased and cancelled 30,000 ordinary shares.
∙ October 1: TBI declared and issued a 3-for-l stock split on the ordinary shares.
∙ December 31: TBI declared $99,600 in dividends on the ordinary shares.
∙ Net income for the year ended December 31,2017 was $600,000.Its tax rate was 40%.
Required:
a.What was weighted average number of ordinary shares outstanding in 2017?
b.What was basic EPS in 2017?
c.If the preferred shares issued on February 1,2017 were non-cumulative,what would basic EPS for 2017 have been?

Accepted Answer

@#IMG-DLM& 
Supporting comments and computations
(

Question 7

Contrast the terms "income effect" and "tax effect."

Accepted Answer

Income effect: In this formula,the incom

Question 8

Use the following information to calculate the "net income available to ordinary shareholders":

Accepted Answer

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

Question 9

For the year ended December 31,2018,Jovial Productions Inc.earned $13,000,000.Outstanding preferred shares included $1,500,000 in 9% cumulative preferred shares issued on January 1,2015 and 32,000 $160 non-cumulative preferred shares issued on January 1,2017 that are each entitled to dividends of $7 per annum.Dividends were neither declared nor paid on either class of the preferred shares in 2016 or 2017.On December 15,2018,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 31,2018.

Accepted Answer

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

Question 10

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

Accepted Answer

A) This method assumes the interest is paid on the convertible security until it was converted into ordinary shares. 
B) This method assumes the interest is paid on the convertible security for one-half of the year. 
C) This method assumes the interest is paid on the convertible security for the period after its issue date. 
D) This method assumes the no interest is paid on the convertible security for the entire year. 
A) This method assumes the interest is paid on the convertible security until it was converted into ordinary shares. 
B) This method assumes the interest is paid on the convertible security for one-half of the year. 
C) This method assumes the interest is paid on the convertible security for the period after its issue date. 
D) This method assumes the no interest is paid on the convertible security for the entire year.

Question 11

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

Accepted Answer

A) $1.00 
B) $75,000 
C) $175,000 
D) $250,000 
A) $1.00 
B) $75,000 
C) $175,000 
D) $250,000

Question 12

Calculate the incremental EPS for the following instrument:

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 13

Which statement is correct about diluted EPS?

Accepted Answer

A) The incremental EPS of the least dilutive item is compared to the basic EPS. 
B) The incremental EPS of the most dilutive item is compared to the basic EPS. 
C) If the incremental EPS is higher than the basic EPS,the item is dilutive. 
D) If the incremental EPS is lower than the basic EPS,the item is anti-dilutive. 
A) The incremental EPS of the least dilutive item is compared to the basic EPS. 
B) The incremental EPS of the most dilutive item is compared to the basic EPS. 
C) If the incremental EPS is higher than the basic EPS,the item is dilutive. 
D) If the incremental EPS is lower than the basic EPS,the item is anti-dilutive.

Question 14

Calculate the incremental EPS for the following instrument:

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

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

Accepted Answer

A) $30,000 
B) $35,000 
C) $90,000 
D) $105,000 
A) $30,000 
B) $35,000 
C) $90,000 
D) $105,000

Question 16

Calculate the incremental EPS for the following instrument:

Accepted Answer

A) 0.63 
B) 1.88 
C) 40,000 
D) 75,000 
A) 0.63 
B) 1.88 
C) 40,000 
D) 75,000

Question 17

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)?

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 18

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 19

Hamm Corporation had 200,000 ordinary shares outstanding on January 1,2018.On April 1,2018,Hamm issued an additional 120,000 shares.On July 1,2018,Hamm repurchased 20,000 ordinary shares and cancelled them.On October 1,2018,Hamm issued an additional 50,000 ordinary shares.
Required:
a.What was the weighted average number of ordinary shares outstanding in 2018 ?
b.Assume that on July 1,2018 Hamm repurchased the shares and held them as treasury shares.Will the weighted average number of ordinary shares outstanding in 2016 change from the amount in part a? Why or why not?

Accepted Answer

a.
 @#IMG-DLM& b.The weighted average number of or

Question 20

Which statement is correct?

Accepted Answer

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

Use the following information to calculate the "net income available to ordinary shareholders":

Which statement is correct?

Calculate the incremental EPS for the following instrument:

Which statement is correct about basic EPS?

Contrast the terms "income effect" and "tax effect."

Use the following information to calculate the "net income available to ordinary shareholders":

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

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

Calculate the incremental EPS for the following instrument:

Which statement is correct about diluted EPS?

Calculate the incremental EPS for the following instrument:

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

Calculate the incremental EPS for the following instrument:

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)?

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

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

Use the following information to calculate the "net income available to ordinary shareholders":

Which statement is correct?

Calculate the incremental EPS for the following instrument:

Which statement is correct about basic EPS?

Contrast the terms "income effect" and "tax effect."

Use the following information to calculate the "net income available to ordinary shareholders":

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

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

Calculate the incremental EPS for the following instrument:

Which statement is correct about diluted EPS?

Calculate the incremental EPS for the following instrument:

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

Calculate the incremental EPS for the following instrument:

Use the following information to calculate the "weighted average number of ordinary shares outstanding" (WASO)?

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

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