petrock company provided the following information at year end:

2018 2019
Ordinary share capital 90,000 shares 90,000 shares
Convertible preference share capital 10,000 shares 10,000 shares

During 2019, the entity paid dividends of 10 per ordinary share and 24 per preference
share.
The preference share capital is convertible into 20,000 ordinary shares. The net income for
2019 was 2,850,000

REQUIRED:

1. basic earnings per share

2. diluted earnings per share

Croatia Company provided the following data for the current year:

Operating revenue 5,600,000

Operating expenses 3,000,000

Income tax rate 30%

Ordinary shares outstanding during the entire year 200,000

At beginning of current year, there were options outstanding to purchase 40,000 ordinary
shares at 25 per share.

The average market price during the year was 20 per share.

The entity reported 2,000,000 of 10% nonconvertible bonds at year end. Interest expense is
included in operating expenses.

REQUIRED:

1. Basic earnings per share

2. Diluted earnings per share

On January 1, 2019, Lex Company had 600,000 ordinary shares outstanding.

On April 1, 2019, an additional 180,000 ordinary shares were issued for cash.

The entity also had 5,000,000 of 8% convertible bonds outstanding during 2019 convertible
into 150,000 ordinary shares. The bonds are dilutive.

No bonds were issued or converted into ordinary shares during 2019.

What is the number of share that be used in computing diluted per share for 2019?

a. 735,000

b. 780,000

c. 885,000

d. 930,000

On July 1, 2019 Jump Company issued 20,000,000 7% convertible bonds at face amount.
Each 1,000 bond is convertible into one ordinary share. No bonds were converted during
the year.

The entity had 200,000, 100 par value ordinary shares outstanding during the year.

The net income for the year was 6,000,000 and the income tax rate was 30%.

What amount should be reported as diluted earnings per share?

a. 30.90

b. 30.00

c. 29.50

d. 31.73

On January 1, 2019, Kate Company had 500,000 ordinary shares outstanding.

On October 1, 2019, an additional 100,000 ordinary shares were issued.

In addition, the entity had 20,000,000 of 6% convertible bonds outstanding on January 1,

2019 convertible into 225,000 ordinary shares. No bonds were converted in 2019.

The net income for the year was 6,000,000 and the income tax rate was 30%.
What amount should be reported as diluted earnings per share?

a. 9.80

b. 9.60

c. 9.12

d. 8.00

Riselle Company obtained the following information from the controller’s office for the
current year:

Net income from January to December 31 2,500,000

Number of outstanding shares:

January 1 to March 31 150,000

April 1 to May 31 120,000

June 1 to December 31 180,000

In addition, the entity had issued 10,000 incentive share options with an exercise price of 30
to the employees and an average market price of 25 per share

What amount should be reported as diluted earnings per share

a. 20.83

b. 16.67

c. 13.89

d. 15.38

Katrina Company reported the following information at the end of reporting period:

Bonds payable- 10% 1,500,000

Preference share capital, 12% cumulative, 100 par, 30,000 shares 3,000,000

Ordinary share capital, 100,000 shares, 50 par 5,000,000

The bonds are convertible into ordinary shares in the ratio of 20 ordinary share for every
1,000 bond.
The preference share is convertible into ordinary share in the ratio of two ordinary share in
the ratio of two ordinary shares for one preference share.

The net income for the year was 3,695,000 and the income tax rate 30%

Required

1. basic earnings per share

2. diluted earnings per share

Pagsanjan Company reported the following capital structure at year end:

Outstanding shares: 2018 2019

Ordinary 500,000 500,000

Convertible preference 100,000 100,000

10% convertible bonds payable 3,000,000 3,000,000

During 2019, the entity paid the annual dividend of 5 on preference share.

The preference shares are convertible into 200,000 ordinary shares and the 10% bonds are
convertible into 100,000 ordinary shares.

The net income for the current year was 5,000,000. The income tax rate is 30%.

Required:

1. Basic earnings per share

2. Diluted earnings per share

Hanzel Company had 200,000 ordinary shares, 20,000 convertible preference shares, and
5,000,000 of 10% convertible bonds outstanding during the current year.

The preference shares are convertible into 40,000 ordinary shares.

Each 1,000 bond is convertible into 5 ordinary shares.

During the current year, the entity paid dividends of 20 per share on the ordinary shares and
40 per share on the preference shares.

The net income for the current year was 8,000,000 and the income tax rate is 30%

1. what amount should be reported as basic earnings per share?

a. 40.00

b. 35.00

c. 16.00

d. 36.00

2. what is the total number of potential ordinary shares?

a. 40,000

b. 65,000

c. 45,000

d. 60,000

3. what amount should be reported as diluted earnings per share?

a. 36.00

b. 33.56

c. 31.51

d. 30.19

During the current year, Quarry Company was authorized to issue 2,000,000 shares with 10
par value.

The entity entered into the following transactions relating to shareholder’s equity:

January 2 issued 1,500,000 ordinary shares for cash.

January 3 entered an agreement with the company president to issue up to 200,000

additional ordinary shares based on the earnings on the entity in the current year.

If net income exceeds 10,000,000 the president will receive shares and
200,000 shares if net income exceeds 12,000,000

December 31 net income for the current year was 11,000,000

1. what amount should be reported as basic earnings per sharefor the current year?
a. 7.33

b. 6.00

c. 5.50

d. 5.00

2. what amount should be reported as diluted earnings per share for the current year?

a. 6.47

b. 6.88

c. 6.11

d. 5.24

On January 1, 2019, Helen Company had 100,000 ordinary shares outstanding and 50,000
7% 100 par cumulative preference per shares outstanding.

On March 1, 2019 the entity purchased 24,000 treasury ordinary shares at 45 per share and
sold 8,000 treasury shares on October 1, 2019 at 50 per share.

Also outstanding on January 1, 2019 were share options to buy 50,000 ordinary shares at
40.

The market price of ordinary share averaged 50 during 2019. No share options were
exercised during 2019.

On January 1, 2019, the entity issued 5,000,000 6% bonds at face amount. The bonds are
convertible into 25,000 ordinary shares. None of the bonds had been converted during the
year.

The net income was 5,400,000 for the current year and the income tax rate is 30%

1. what amount should be reported as basic EPS?

a. 65.85

b. 50.50

c. 61.59

d. 54.00

2. what amount should be reported as diluted EPS?

a. 45.73

b. 33.50

c. 44.96

d. 43.16

Venus Company provided the following transactions involving the ordinary share capital:

2019

January 1 had a balance of 200,000 shares of 10 par value

April 1 converted 2,500,000 of convertible bonds with 50 shares issued for each
1,000 bond.

July 1 declared a 10% share dividend.

October 1 employees exercised options to purchase 7,000 shares for 20 a share.

2020

April 1 declared a 2 for 1 share split

October 1 sold 170,000 shares for 30 a share.

1. what is the weighted average number of shares for 2019 to be used for basic EPS
computation for comparative financial statements on December 31, 2020?

a. 649,750

b. 729,000

c. 664,000

d. 364,500

2. what is the weighted average number of shares for 2020 to be used for basic EPS
computation for comparative financial statements on December 31,2020?

a. 771,500

b. 899,000

c. 834,000
d. 706,500

On January 1, 2019, Shane Company had 100,000 ordinary shares outstanding. The
following transactions occurred during 2019.

March 1 reacquired 3,000 shares accounted for as treasury.

September 1 sold all treasury shares.

December 1 sold 66,000 new shares for cash.

December 31 reported a net income of 2,600,000.

The following transactions occurred during 2020.

January 15 declared and issued a 25% share dividend.

December 31 reported a net income of 4,000,000

1. what amount should be reported as basic earnings per share for 2019 for presentation in
comparative financial statements on December 31,2020?

a. 15.66

b. 20.00

c. 20.80

d. 19.90

2. what amount should be reported as basic earnings per share for 2020 for presentation in
comparative financial statements on December 31, 2020?

a. 24.10

b.19.28

c. 30.77

d. 32.00
Beal Company reported the following changes in the statement of financial position
accounts during the current year:

Increase (Decrease)

ASSETS

Cash and cash equivalents 120,000

Short term investments 300,000

Accounts receivable, net ---

Inventory 80,000

Long term investments (100,000)

Property, plant and equipment 700,000

Accumulated depreciation ---

1,000,000

LIABILITIES AND EQUITY

Accounts payable and accrued liabilities (5,000)

Dividend payable 160,000

Short term bank debt 325,000

Long term debt 110,000

Ordinary share capital, 10 par 100,000

Share premium 120,000

Retained earnings 290,000

1,100,000

The following additional information relates to the current year:

 net income for the current year was 790,000
 cash dividend of 500,000 was declared.
 Equipment costing 600,000 and having a carrying amount of 350,000 was sold for
350,000.
 Equipment costing 110,000 was acquired through issuance of long term debt.
 A long term investment was sold for 135,000. There were no other transactions
affecting long term investments.
 10,000 ordinary shares were issued for 22 a share.

1. what amount should be reported as net cash provided by operating activities?

a. 1,600,000

b. 1,040,000

c. 920,000

d. 705,000

2. what amount should be reported as net cash used in investing activities?

a. 1,005,000

b. 1,190,000

c. 1,275,000

d. 1,600,000

3. what amount should be reported as net cash used in financing activities?

a. 20,000

b. 45,000

c. 150,000

d. 205,000

On January 1, 2019, SME acquired a 30% interest in the ordinary shares of another entity
that carry voting rights for 15,000,000.

On this date, the carrying amount of the net assets acquired is 13,250,000.
The carrying amount of the identifiable assets and liabilities of the investee equaled fair
value except for equipment whose fair value exceeded the carrying amount by 2,500,000.

The remaining useful life for the equipment is five year and any implicit goodwill is
amortized over the maximum allowed by SME standard.

On December 31, 2019, the investee reported net income of 20,000,000 and declared
dividend of 7,500,000.

The fair value of the investment in associate is 21,250,000 on December 31, 2019 and
there is no published price quotation. SME elected due to use the equity method.

1. what is the implied goodwill from the acquisition?

a. 1,750,000

b. 1,000,000

c. 750,000

d. 0

2. what is the investment income for 2019?

a. 2,250,000

b. 6,000,000

c. 5,750,000

d. 5,850,000

3. what is the carrying amount of the investment in associate on December 31,2019?

a. 18,500,000

b. 21,250,000

c. 16,750,000

d. 18,600,000