
Earnings per share: Earnings per share (EPS) indicates the income earned per share of common stock. EPS is calculated as Basic EPS and Diluted EPS.
The income for EPS is calculated by subtracting the preference dividends. The income is divided by weighted-average common shares outstanding. This is Basic EPS. Basic EPS does not consider the dilutive effects of convertible long-term debts. Diluted EPS is based on the assumption that for all convertible securities like
To compute: To compute diluted earnings per share.
Given Information: Net income: $300,000.
Common Stock: 100,000.
Bonds: 800,000.
Rate: 10%.
Convertible into: 16,000 shares.
Tax rate: 40%.

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Chapter 16 Solutions
Intermediate Accounting 16E Binder Ready Version With Wiley Plus Blackboard
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