Question 1

Which statement is correct?

Accepted Answer

A) Diluted EPS decreases the comparability of financial statements. 
B) Diluted EPS decreases the understandability of financial statements. 
C) Diluted EPS addresses the moral hazard information asymmetry. 
D) Diluted EPS is calculated in the same manner as basic EPS. 
A) Diluted EPS decreases the comparability of financial statements. 
B) Diluted EPS decreases the understandability of financial statements. 
C) Diluted EPS addresses the moral hazard information asymmetry. 
D) Diluted EPS is calculated in the same manner as basic EPS.

Question 2

Calculate the incremental EPS for the following instrument:

Accepted Answer

A) $0.94 
B) $0.75 
C) $0.31 
D) $0.25 
A) $0.94 
B) $0.75 
C) $0.31 
D) $0.25

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) Antidilutive potential ordinary shares,if converted,will increase EPS or decrease the loss per share from continuing operations. 
D) Antidilutive 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) Antidilutive potential ordinary shares,if converted,will increase EPS or decrease the loss per share from continuing operations. 
D) Antidilutive potential ordinary shares,if converted,will decrease EPS or decrease the loss per share from continuing operations.

Question 4

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 non-cumulative in nature.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-Dividends are neith

Question 5

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 6

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 7

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 8

Which statement is correct regarding a company which buys call options on its own shares from an outside company?

Accepted Answer

A) Issued options are always antidilutive. 
B) Issued options are always dilutive. 
C) Purchased options are always antidilutive. 
D) Purchased options are always dilutive. 
A) Issued options are always antidilutive. 
B) Issued options are always dilutive. 
C) Purchased options are always antidilutive. 
D) Purchased options are always dilutive.

Question 9

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 10

Which statement is correct?

Accepted Answer

A) Basic EPS is based on the dilutive shares outstanding at the end of the year. 
B) Basic EPS is based on the dilutive shares outstanding during the year. 
C) Basic EPS is based on the ordinary shares outstanding at during the year. 
D) Basic EPS is based on the ordinary shares outstanding at the end of the year. 
A) Basic EPS is based on the dilutive shares outstanding at the end of the year. 
B) Basic EPS is based on the dilutive shares outstanding during the year. 
C) Basic EPS is based on the ordinary shares outstanding at during the year. 
D) Basic EPS is based on the ordinary shares outstanding at the end of the year.

Question 11

Sad Man Inc.had 220,000 ordinary shares outstanding in all of 2016.On January 1,2014,Sad issued at par $400,000 in 10% bonds maturing on January 1,2022.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 2016.Each preferred share is convertible into three ordinary shares.Sad's net income for the year ended December 31,2016 was $250,000.Its income tax rate was 35%.
Required:
a.Calculate Sad's basic EPS for 2016.
b.Are the convertible bonds dilutive or anti-dilutive in nature? The convertible preferred shares?
c.Calculate Sad's diluted EPS for 2016.

Accepted Answer

The answer of Sad Man Inc.had 220,000 ordinary shares outstanding...

Question 12

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 $150,000 dividends on the 4% cumulative preferred shares and $150,000 in dividends on the non-cumulative preferred shares,both payable on January 15,2018.
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 13

Explain the difference between basic and diluted EPS.

Accepted Answer

Basic EPS communicates "ownership" of ea

Question 14

Which of the following are financial instruments that give rise to POS?

Accepted Answer

A) Convertible bonds that can be exchanged for cumulative preferred shares. 
B) Convertible preferred shares that can be exchanged for ordinary shares. 
C) Land that can be exchanged for preferred shares. 
D) Stock options and warrants that permit the holder to buy preferred shares from the company at a predetermined price. 
A) Convertible bonds that can be exchanged for cumulative preferred shares. 
B) Convertible preferred shares that can be exchanged for ordinary shares. 
C) Land that can be exchanged for preferred shares. 
D) Stock options and warrants that permit the holder to buy preferred shares from the company at a predetermined price.

Question 15

Which statement is correct?

Accepted Answer

A) Companies with a simple capital structure must disclose diluted EPS. 
B) Companies with a complex capital structure must disclose diluted EPS. 
C) Companies with a simple capital structure do not need to disclose basic EPS. 
D) Companies with a complex capital structure do not need to disclose diluted EPS. 
A) Companies with a simple capital structure must disclose diluted EPS. 
B) Companies with a complex capital structure must disclose diluted EPS. 
C) Companies with a simple capital structure do not need to disclose basic EPS. 
D) Companies with a complex capital structure do not need to disclose diluted EPS.

Question 16

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

Accepted Answer

A) $3,860,000 
B) $3,870,000 
C) $3,950,000 
D) $3,960,000 
A) $3,860,000 
B) $3,870,000 
C) $3,950,000 
D) $3,960,000

Question 17

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 18

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 19

Accu Tech Renovations Corp.(ATRC)was incorporated on January 1,2018.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 31,2018 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.
Required:
Compute basic EPS.

Accepted Answer

@#IMG-DLM& 
Supporting comment-238,000 in dividend

Question 20

Since,the objective of reporting diluted EPS is to provide the lowest possible EPS figure,we include all dilutive POS but exclude any antidilutive POS.What are the four steps in the process to separate dilutive from antidilutive POS and to calculate diluted EPS?

Accepted Answer

1.Identify all potential ordinary shares

Which statement is correct?

Calculate the incremental EPS for the following instrument:

Which statement is correct?

Which statement is correct about basic EPS?

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

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

Which statement is correct regarding a company which buys call options on its own shares from an outside company?

Which statement is correct?

Which statement is correct?

Explain the difference between basic and diluted EPS.

Which of the following are financial instruments that give rise to POS?

Which statement is correct?

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

Which statement is correct about basic EPS?

Since,the objective of reporting diluted EPS is to provide the lowest possible EPS figure,we include all dilutive POS but exclude any antidilutive POS.What are the four steps in the process to separate dilutive from antidilutive POS and to calculate diluted 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

Accounting Changes

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Exam 15: Earnings Per Share

Which statement is correct?

Calculate the incremental EPS for the following instrument:

Which statement is correct?

Which statement is correct about basic EPS?

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

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

Which statement is correct regarding a company which buys call options on its own shares from an outside company?

Which statement is correct?

Which statement is correct?

Explain the difference between basic and diluted EPS.

Which of the following are financial instruments that give rise to POS?

Which statement is correct?

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

Which statement is correct about basic EPS?

Since,the objective of reporting diluted EPS is to provide the lowest possible EPS figure,we include all dilutive POS but exclude any antidilutive POS.What are the four steps in the process to separate dilutive from antidilutive POS and to calculate diluted 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

Accounting Changes

Filters