Earnings per share (EPS) : The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock , and stock options, reduce the EPS by increasing the common shares. Use the following formula to determine EPS: Earnings per share } = Earnings available to common shareholders Weighted average number of common shares outstanding = Net income –Preferred dividends Weighted average number of common shares outstanding To determine : The basic and diluted EPS of Company AS for the year ended December 31, 2018

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#27 ABC Company started operations way back in the year 2000. The entity’s capital structure consistently consisted of 200,000 P 20 par ordinary shares until the end of 2020. Other relevant information follows: - Towards the end of 2020, the company issued stock options to purchase 10,000 ordinary shares at P 30 per share. At the time the options were issued, the market price per share was P 45. Average market price per share during 2021 was P 48. None of the options were exercised in 2021. - On February 1, 2021, ABC Company issued for cash 20,000 shares of P 100 par, 12% cumulative preference shares. Each preference share is convertible into two ordinary shares. - 10% bonds with face amount of P 2,000,000 are outstanding throughout the year 2021. Each 5,000 bond is convertible into 100 ordinary shares. - Profit for 2021 amounted to P 2,800,000 and income tax rate is 30%. For 2021 diluted earnings per share, what is the sequence of the potential ordinary shares starting from the least…

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Chapter 19, Problem 19.25E

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstanding= Net income –Preferred dividendsWeighted average number of common shares outstanding

To determine: The basic and diluted EPS of Company AS for the year ended December 31, 2018

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#27 ABC Company started operations way back in the year 2000. The entity’s capital structure consistently consisted of 200,000 P 20 par ordinary shares until the end of 2020. Other relevant information follows: - Towards the end of 2020, the company issued stock options to purchase 10,000 ordinary shares at P 30 per share. At the time the options were issued, the market price per share was P 45. Average market price per share during 2021 was P 48. None of the options were exercised in 2021. - On February 1, 2021, ABC Company issued for cash 20,000 shares of P 100 par, 12% cumulative preference shares. Each preference share is convertible into two ordinary shares. - 10% bonds with face amount of P 2,000,000 are outstanding throughout the year 2021. Each 5,000 bond is convertible into 100 ordinary shares. - Profit for 2021 amounted to P 2,800,000 and income tax rate is 30%. For 2021 diluted earnings per share, what is the sequence of the potential ordinary shares starting from the least…

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