Question 1

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

Accepted Answer

A)  Treasury shares that are cancelled are adjusted in this calculation. 
B)  Treasury shares that are not cancelled are adjusted in this calculation. 
C)  Treasury shares that are repurchased are adjusted in this calculation. 
D)  Treasury shares are ignored for purposes of this calculation. 
A)  Treasury shares that are cancelled are adjusted in this calculation. 
B)  Treasury shares that are not cancelled are adjusted in this calculation. 
C)  Treasury shares that are repurchased are adjusted in this calculation. 
D)  Treasury shares are ignored for purposes of this calculation.

Question 2

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&_TB1321_00_TB1321_00_TB1321_00 The yearl

Question 3

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 4

Which of the following is correct about the difference between basic earnings per share (EPS)and diluted earnings per share?

Accepted Answer

A)  Basic EPS uses total common shares outstanding, whereas diluted EPS uses the weighted-average number of common shares. 
B)  Basic EPS is not a required disclosure, whereas diluted EPS is required disclosure. 
C)  Basic EPS is not adjusted for the potential dilutive effects of complex financial structures, whereas diluted EPS is adjusted. 
D)  Basic EPS uses comprehensive income in its calculation, whereas diluted EPS does not. 
A)  Basic EPS uses total common shares outstanding, whereas diluted EPS uses the weighted-average number of common shares. 
B)  Basic EPS is not a required disclosure, whereas diluted EPS is required disclosure. 
C)  Basic EPS is not adjusted for the potential dilutive effects of complex financial structures, whereas diluted EPS is adjusted. 
D)  Basic EPS uses comprehensive income in its calculation, whereas diluted EPS does not.

Question 5

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 6

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 7

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 8

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 9

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&_TB1321_00_TB1321_00_TB1321_00 Supportin

Question 10

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 11

What are the two assumptions of the "if-converted method" used when calculation incremental EPS?

Accepted Answer

The if-converted method assumes:
(i)that

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 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&_TB1321_00_TB1321_00_TB1321_00 The yearl

Question 13

What is the meaning of "out-of-the-money warrants"?

Accepted Answer

A)  Warrants are out-of-the-money if the market price of the share exceeds the exercise price. 
B)  Warrants are out-of-the-money if the market price of the share is less than the exercise price. 
C)  Warrants are out-of-the-money if the market price of the share equals the exercise price. 
D)  Warrants are out-of-the-money when the market price means that it will be exercised. 
A)  Warrants are out-of-the-money if the market price of the share exceeds the exercise price. 
B)  Warrants are out-of-the-money if the market price of the share is less than the exercise price. 
C)  Warrants are out-of-the-money if the market price of the share equals the exercise price. 
D)  Warrants are out-of-the-money when the market price means that it will be exercised.

Question 14

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 15

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

Accepted Answer

A)  This is the incremental before-tax income available to ordinary shareholders. 
B)  This is the incremental after-tax income available to ordinary shareholders. 
C)  This is the incremental number of ordinary shares outstanding before conversion. 
D)  This is the incremental number of ordinary shares outstanding after conversion. 
A)  This is the incremental before-tax income available to ordinary shareholders. 
B)  This is the incremental after-tax income available to ordinary shareholders. 
C)  This is the incremental number of ordinary shares outstanding before conversion. 
D)  This is the incremental number of ordinary shares outstanding after conversion.

Question 16

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 17

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.
Harvest did not declare any dividends during 2018.
Required:
Determine the net income available to ordinary shareholders for the year ended December 31,2018.

Accepted Answer

@#IMG-DLM&_TB1321_00_TB1321_00_TB1321_00 The yearl

Question 18

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 not pro-rated for the diluted EPS calculation. 
C)  When the right to convert convertible securities expires during the year, the income effect and share effect are pro-rated for the diluted EPS calculation. 
D)  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. 
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 not pro-rated for the diluted EPS calculation. 
C)  When the right to convert convertible securities expires during the year, the income effect and share effect are pro-rated for the diluted EPS calculation. 
D)  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.

Question 19

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 20

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&_TB1321_00_TB1321_00_TB1321_00 Supportin

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

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

Which of the following is correct about the difference between basic earnings per share (EPS)and diluted earnings per share?

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

Which statement is correct?

Which statement is correct about basic EPS?

Which statement is correct about basic EPS?

What are the two assumptions of the "if-converted method" used when calculation incremental EPS?

What is the meaning of "out-of-the-money warrants"?

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

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

Calculate the incremental EPS for the following instrument:

Which statement is correct?

Calculate the income effect on 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

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

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

Which of the following is correct about the difference between basic earnings per share (EPS)and diluted earnings per share?

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

Which statement is correct?

Which statement is correct about basic EPS?

Which statement is correct about basic EPS?

What are the two assumptions of the "if-converted method" used when calculation incremental EPS?

What is the meaning of "out-of-the-money warrants"?

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

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

Calculate the incremental EPS for the following instrument:

Which statement is correct?

Calculate the income effect on 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