Consolidated earnings per share:is calculated in the same way as earnings per share is calculated in a single corporation. Consolidated earnings per share is based on the income attributed to the controlling interest and available to parent’s common stock. Basic consolidated EPS is calculated by deducting income to the non-controlling interest and any preferred dividends requirement of the parent company from consolidated net income. The resulting amount is then divided by the weighted-average number of the parent’s common shares outstanding during the period. In computation of EPS, the parent’s percentage of ownership changes frequently when subsidiary convertible bonds and
computation of diluted EPS, for the consolidated entity for 20X2.
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EBK ADVANCED FINANCIAL ACCOUNTING
- Below is select information from two, independent companies. Additional information includes: On January 1, Company A issued a 5-year $1,500,000 bond with at 6% stated rate. Interest is paid semiannually and the bond was sold at 105.5055 to yield a market rate of 4.75%. On January 1, Company B sold $1,500,000 of common stock and paid dividends of $75,000. A. Prepare an income statement for each company (ignore taxes) B. Explain why the net income amounts are different, paying particular attention to the operational performance and financing performance of each company. (Hint: it may be helpful for you to create an amortization table).arrow_forwardLone Company reported the following at year-end: Bonds payable – 10% Ordinary share capital, P100 par, 50,000, shares Net income 1,000,000 5,000,000 1,730,000 The bonds are convertible into ordinary shares in the ratio of 10 ordinary shares for each P1,000 bond. The income tax rate is 30%. Requirement: A. Compute for the Basic earnings per share. B. Compute for the Diluted earnings per share.arrow_forwardKKK Company reported the following at year-end: 10% Bonds payable 1,000,000 Ordinary share capital, P100 par, 50,000 shares 5,000,000 Net income 1,730,000 The bonds are convertible into ordinary shares in the ratio of 10 ordinary shares for each P1,000 bond. The income tax rate is 30%. Questions: 1. Compute for the basic earnings per share. 2. Compute for the diluted earnings per share.arrow_forward
- Douglas Corporation issued at a premium of $10,000 a $200,000 bond issue convertible into 4,000 shares of common stock (par value $20). At the time of the conversion, the unamortized premium is $4,000, the market value of the bonds is $220,000, and the stock is quoted on the market at $60 per share. If the bonds are converted into common, what is the amount of paid-in capital in excess of par to be recorded on the conversion of the bonds?arrow_forwardOn July 1, Year 1, XYZ Corporation purchased as a long-term investment a $2 million face amountABC Co. 6% bond for $2,025,000 plus accrued interest to yield 5.75%. On December 31, Year 1,the bonds had a fair value of $1,850,000. What amount of income should XYZ report on its incomestatement for the year ended December 31, Year 1, related to this bond investment if it is classifiedas a held-to-maturity security?a. $120,000b. $116,438c. $121,500d. $115,000arrow_forwardplease avoid images in answers thank youarrow_forward
- Problem Isabel Company had outstanding share capital with par value amount of P10,000,000. Interest on the bond is payable of P50,000,000 and 12% convertible bonds payable with face annually on December 31. The conversion clause entitled the bondholders to receive 50 shares of P20 par value in exchange for each P1,000 bond. At year-end, the holders of bonds with face amount of P2,000,000 exercised the conversion privilege. The market price of the bonds on that date was P1,200 per bond and the market price of the share was P25. The premium on bonds payable at the date of conversion was P3,000,000. The share premium from conversion privilege had a balance P1,500,000 at the date of conversion. What amount of share premium should be recognized by reason of the bond conversion? a. 450,000 b. 300,000 c. 600,000 d. 900,000arrow_forwardOn January 1, 2X16, Manila Co. has 100,000 outstanding ordinary shares. During the year, Manila Co. reported a net income of P5,000,000. The income tax rate is 30%. Besides, Manila Co. has 4,000, 10% convertible bonds with 1,000 face amount. Each bond is convertible into five (5) ordinary shares. Required: Solve for the following: 1. Determine the amount of basic earnings per share for the year. 2. Determine the amount of diluted earnings per share under each of the following scenarios. a. Bonds were issued on January 1, 2X16, and there were no conversions made during the year. b. Bonds were issued on April 1, 2X16, and there were no conversions made during the year. c. Bonds were issued in the previous year and were converted on October 1, 2X16.arrow_forwardPlease answer the requirements Bay Company had P600,000, convertible 8% bonds payable outstanding on June 30. Each P1,000 bond was convertible into 1 ordinary shares of P50 par value. On July 1, the interest was paid to bondholders, and the bonds were converted into ordinary shares, which had a fair value of P75 per share. The unamortized premium on these bonds was P12,000 at the date of conversion. No equity component was recognized when the bonds were originally issued. Requirements What amount should be recorded as increase in share capital as result of the bond conversion? What amount should be recorded as increase in share premium as a result of the bond conversion?arrow_forward
- sarasota corporation has 9% convertible bonds outstanding. it recorded interest expense (net of income taxes) Oven $6,300 on these bonds during the year. The bonds are convertible into 2500 shares of common stock. compute the impact of these convertible bonds on Sarasota diluted earnings per share.arrow_forwardwy Company issued $500,000, 8% bonds on January 1, Year 1. The bonds pay interest on June 30 and December 31 and mature on December 31, Year 10. The bonds were issued to yield 6%. Each $1,000 bond was convertible into 50 shares of wy Company’s no-par common stock. On January 1, Year 4, when the common stock was trading for $12 per share, one-half of the bonds were converted. wy Company uses the effective interest method to account for bond discounts and premiums. The entry to record the conversion of the bonds on January 1, Year 4 would include plese give me answer dont give in image formatarrow_forwardFarmer 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 =arrow_forward
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning