1. Richmond Co. sold convertible bonds at a premium. Interest is paid on May 31 andNovember 30. On May 31, after interest was paid, 100, $1,000 bonds are tendered forconversion into 3,000 shares of $10 par value ordinary shares that had a market price of$40 per share. How should Richmond Co. account for the conversion of the bonds intoordinary shares under the book value method? Discuss the rationale for this method. 2. Wilson's Corporation is one of your new audit clients. The corporation's accountant isuncertain how to report earnings per share in accordance with IFRS and is requesting thatyou provide the following information:Define the term 'earnings per share' as it applies to a corporation with a capitalizationstructure composed of only one class of ordinary shares. Explain how earnings per shareshould be computed and how the information should be disclosed in the corporation'sfinancial statements.
1. Richmond Co. sold convertible bonds at a premium. Interest is paid on May 31 and
November 30. On May 31, after interest was paid, 100, $1,000 bonds are tendered for
conversion into 3,000 shares of $10 par value ordinary shares that had a market price of
$40 per share. How should Richmond Co. account for the conversion of the bonds into
ordinary shares under the book value method? Discuss the rationale for this method.
2. Wilson's Corporation is one of your new audit clients. The corporation's accountant is
uncertain how to report earnings per share in accordance with IFRS and is requesting that
you provide the following information:
Define the term 'earnings per share' as it applies to a corporation with a capitalization
structure composed of only one class of ordinary shares. Explain how earnings per share
should be computed and how the information should be disclosed in the corporation's
financial statements.
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