Calculate the basic earnings per share for UMC for the year ended December 31, 2020.
Urgency Medical Centre Inc. (UMC), a publicly traded entity, began operations in 2015
and reports according to IFRS. Relevant information related to UMC’s 2020 financial
results are as follows:
Statement of comprehensive income
For the year ended December 31, 2020
Revenue $50,000,000
Expenses 38,000,000
Income from continuing operations before taxes 12,000,000
Income tax expense (30%) (3,600,000)
Net income $ 8,400,000
Additional information:
• At January 1, 2020, UMC had 2,000,000 common shares outstanding and
10,000 $2 cumulative preference shares outstanding.
• On January 2, 2020, UMC issued 6,000 cumulative preference shares at $100 per
share, entitling the shareholder to dividends of $3 per share per year. At the option
of the holder, each
any time after July 1, 2021.
• On July 1, 2020, UMC declared a two-for-one stock split on common shares.
• On August 1, 2020, UMC issued 10,000 common shares for $15 each.
• As part of the purchase of new equipment, UMC agreed to issue 100,000 common
shares to a supplier. The agreement was finalized (and shares were issued) on
October 1, 2020.
• Dividends of $50,000 were declared and paid in December 2020.
• The average market price of UMC’s shares during 2020 was $14; the market price at
December 31, 2020, was $18.
• On December 31, 2020, UMC issued a 12% stock dividend to all common
shareholders.
Required:
Calculate the basic earnings per share for UMC for the year ended December 31, 2020.
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