Farmer Company had the following share capital as of December 31, 2021: Bonds payable, P1,000 face value, 5,000 bonds, 6% interest rate, each bonds are convertible into twenty ordinary shares Ordinary share capital, P50 par, 500,000 shares authorized, 200,000 shares outstanding 5,000,000 10,000,000 The entity reported a net income of P5,400,000 for the current year. The income tax rate is 30%. Compute for the basic and diluted earnings per share based on the following independent scenarios: A. The bonds were issued in the prior year at par value. BEPS = DEPS = B. The bonds were issued on July 1, 2021. BEPS = DEPS =

Farmer Company had the following share capital as of December 31, 2021: Bonds payable, P1,000 face value, 5,000 bonds, 6% interest rate, each bonds are convertible into twenty ordinary shares Ordinary share capital, P50 par, 500,000 shares authorized, 200,000 shares outstanding 5,000,000 10,000,000 The entity reported a net income of P5,400,000 for the current year. The income tax rate is 30%. Compute for the basic and diluted earnings per share based on the following independent scenarios: A. The bonds were issued in the prior year at par value. BEPS = DEPS = B. The bonds were issued on July 1, 2021. BEPS = DEPS =

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

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Farmer Company had the following share capital as of December 31, 2021:
Bonds payable, P1,000 face value, 5,000 bonds, 6% interest rate, each bonds are
convertible into twenty ordinary shares
Ordinary share capital, P50 par, 500,000 shares authorized, 200,000 shares outstanding
5,000,000
10,000,000
The entity reported a net income of P5,400,000 for the current year. The income tax rate is 30%.
Compute for the basic and diluted earnings per share based on the following independent scenarios:
A. The bonds were issued in the prior year at par value.
BEPS =
DEPS
%3D
B. The bonds were issued on July 1, 2021.
BEPS =
DEPS =

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