Exam 15: Earnings Per Share

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

Calculate the incremental EPS for the following instrument:

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 the "if-converted" method for EPS?

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 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 EPS.

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

Ned Company reported the following information for its fiscal year: The preferred dividends listed above include the current year and prior accumulated dividends.What is the amount of net income available to common shareholders?

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

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

Which statement is correct?

Which statement is correct?

For the year ended December 31,2016,Harvest Productions Inc.earned $4,000,000.Outstanding preferred shares included $400,000 in 3% cumulative preferred shares issued on January 1,2015 and $500,000 in 2% non-cumulative preferred shares issued on January 1,2016.Dividends on the cumulative preferred shares were not declared in 2015.On December 15,2016,Harvest declared and paid $24,000 in dividends on the 3% cumulative shares including the arrears.Harvest also declared and paid the $10,000 dividends on the non-cumulative shares. Required: Determine the net income available to ordinary shareholders for the year ended December 31,2016.

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

Which statement is correct?

Which statement is correct?

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

Calculate the incremental EPS for the following instrument:

In 2017,TC Mulch Inc.'s net income was $200,000.Mulch had 220,000 ordinary shares outstanding at year end.There were two ordinary share transactions during the year: i)Mulch declared and distributed a 4-for-1 stock split on March 1,2017;and ii)Option C was exercised on April 1,2017.Details of Mulch's stock option plans follow: ∙ Option A entitles employees to purchase 40,000 ordinary shares for $9.00 each.This option was granted during 2016 and expires in 2019. ∙ Option B entitles employees to purchase 40,000 ordinary shares for $21.00 each.This option was granted on July 1,2017 and expires in 2020. ∙ Option C entitles employees to purchase 40,000 ordinary shares for $13.00 each.This option was granted during 2015 and was exercised on April 1,2017. ∙ Option D entitles employees to purchase 40,000 ordinary shares for $17.00 each.This option was granted on September 1,2017 and expires in 2020. The average market price of Mulch's ordinary shares for the year is $18.00.Mulch does not have any preferred shares or convertible bonds outstanding.The recorded exercise prices and number of shares that can be acquired under the stock option plans have already been adjusted for the stock split. Required: a.Calculate Mulch's basic earnings per share for the year ended December 31,2017. b.Calculate Mulch's diluted earnings per share for the year ended December 31,2017.

For the year ended December 31,2018,Harvest Productions Inc.earned $4,000,000.Outstanding preferred shares included $400,000 in 3% cumulative preferred shares issued on January 1,2017 and $500,000 in 2% non-cumulative preferred shares issued on January 1,2018.Dividends on the cumulative preferred shares were not declared in 2017.On December 15,2018,Harvest declared $10,000 in dividends on the non-cumulative preferred shares,payable on January 15,2019.Dividends on the cumulative preferred shares are neither declared nor paid. Required: Determine the net income available to ordinary shareholders for the year ended December 31,2018.

During 2015,Furry Kittens Inc.(FKI)had three series of employee stock options outstanding,details of which follow: ∙ Options A entitle employees to purchase 60,000 ordinary shares for $58.00 each.This series of options was granted on February 1,2013 and expires on June 30,2015. ∙ Options B entitle employees to purchase 10,000 ordinary shares for $62.00 each until December 31,2016 and $59.00 thereafter.This series of options was granted on June 1,2012 and expires on December 31,2019. ∙ Options C entitle employees to purchase 45,000 ordinary shares for $57.00 each.This series of options was granted on April 1,2015 and expires on December 31,2018. The average market price of FKI's ordinary shares for the year ended December 31,2015 was $60.00. Required: a.For each of the options series,indicate whether they are dilutive or anti-dilutive in nature in 2015 and provide the reason why. b.For each of the options series that are dilutive,determine the number of incremental shares to be notionally issued.