Question 1

Describe the procedure for identifying dilutive and antidilutive potential ordinary shares and calculating diluted EPS.

Accepted Answer

The process for identifying dilutive and

Question 2

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

Accepted Answer

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

Question 3

Which statement is correct?

Accepted Answer

A)  Basic EPS increases the understandability of financial statements. 
B)  Basic EPS decreases the understandability of financial statements. 
C)  Basic EPS addresses the moral hazard information asymmetry. 
D)  Basic EPS can be calculated in different ways by different companies. 
A)  Basic EPS increases the understandability of financial statements. 
B)  Basic EPS decreases the understandability of financial statements. 
C)  Basic EPS addresses the moral hazard information asymmetry. 
D)  Basic EPS can be calculated in different ways by different companies.

Question 4

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 5

The net income for Cedarsprings Retreat Centre for the year ended December 31,2017,was $800,000.Cedarsprings had 50,000 ordinary shares outstanding at the beginning of the year.Cedarsprings declared and distributed a three-for-one stock split on May 1,2017 and issued (sold)30,000 ordinary shares on November 1,2017.Select details of Cedarsprings' liabilities and equities follow:
Bonds A-$2,000,000,6%,10-year,semi-annual bonds issued on July 1,2017.At the option of the holder,each $1,000 bond can be converted into 14 ordinary shares at any time before expiry.
Bonds B-$2,000,000,5%,semi-annual bonds maturing September 30,2021.The owners of the bonds elect to convert them into 12,000 ordinary shares on December 1,2017.
200,000 cumulative preferred shares that are each entitled to dividends of $2.00 per annum.Dividends are not declared in 2017.Cedarsprings' corporate tax rate was 40%.The recorded conversion factor for the convertible bonds has already been adjusted for the stock split.
Required: Assuming that the effective rate of interest on the bonds equals the coupon rate:
a)Calculate Cedarsprings' basic earnings per share for 2017.
b)Prepare a schedule that sets out the income effect,share effect,and incremental EPS for each security that is convertible into ordinary shares.Rank the potential ordinary shares by their dilutiveness.
c)Calculate Cedarsprings' diluted earnings per share for 2017.

Accepted Answer

Cedarsprings' basic and diluted EPS are

Question 6

What is the formula for diluted EPS? What are dilutive and antidilutive potential ordinary shares and how do they each impact the computation of dilutes EPS?

Accepted Answer

Diluted EPS = (Net income available to o

Question 7

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 8

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

Question 11

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.

Accepted Answer

@#IMG-DLM&_TB1321_00_TB1321_00_TB1321_00 The yearl

Question 12

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&_TB1321_00_TB1321_00_TB1321_00 Supportin

Question 13

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 14

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 15

Explain the purpose of incremental EPS.

Accepted Answer

Incremental EPS is used to rank the orde

Question 16

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

Accepted Answer

A)  This method assumes the convertible security is converted into ordinary shares at the end of the fiscal period. 
B)  This method assumes the convertible security is converted into ordinary shares at the beginning of the fiscal period. 
C)  This method assumes the convertible security is converted into ordinary shares evenly over the fiscal period. 
D)  This method assumes the convertible security is converted into ordinary shares at the mid-point of the fiscal period. 
A)  This method assumes the convertible security is converted into ordinary shares at the end of the fiscal period. 
B)  This method assumes the convertible security is converted into ordinary shares at the beginning of the fiscal period. 
C)  This method assumes the convertible security is converted into ordinary shares evenly over the fiscal period. 
D)  This method assumes the convertible security is converted into ordinary shares at the mid-point of the fiscal period.

Question 17

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 18

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&_TB1321_00_TB1321_00_TB1321_00 Supportin

Question 19

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.

Question 20

Calculate the incremental EPS for the following instrument:

Accepted Answer

A)  0.63 
B)  1.88 
C)  40,000 
D)  2.10 
A)  0.63 
B)  1.88 
C)  40,000 
D)  2.10

Describe the procedure for identifying dilutive and antidilutive potential ordinary shares and calculating diluted EPS.

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

Which statement is correct?

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

What is the formula for diluted EPS? What are dilutive and antidilutive potential ordinary shares and how do they each impact the computation of dilutes EPS?

Which statement is correct?

Calculate the incremental EPS for the following instrument:

Which statement is correct?

Which statement is correct?

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

Which statement is correct?

Explain the purpose of incremental EPS.

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

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

Which statement is correct?

Calculate the incremental EPS for the following instrument:

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 5: Earnings Per Share

Describe the procedure for identifying dilutive and antidilutive potential ordinary shares and calculating diluted EPS.

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

Which statement is correct?

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

What is the formula for diluted EPS? What are dilutive and antidilutive potential ordinary shares and how do they each impact the computation of dilutes EPS?

Which statement is correct?

Calculate the incremental EPS for the following instrument:

Which statement is correct?

Which statement is correct?

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

Which statement is correct?

Explain the purpose of incremental EPS.

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

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

Which statement is correct?

Calculate the incremental EPS for the following instrument:

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