Reference no: EM133160174
Questions -
Q1) Sheridan Corporation earned net income of $341,250 in 2020 and had 105,000 common shares outstanding throughout the year. Also outstanding all year was $870,000 of 10% bonds that are convertible into 10,500 common shares. Sheridan's tax rate is 45%.
Calculate Sheridan's 2020 diluted earnings per share. For simplicity, ignore the IFRS requirement to record the debt and equity components of the bonds separately.
Q2) Wildhorse Corporation reported net income of $517,000 in 2020 and had 650,000 common shares outstanding throughout the year. On May 1, 2020, Wildhorse issued 5% convertible bonds. Each $1,000 bond is convertible into 120 common shares. Total proceeds at par amounted to $940,000, and was allocated to the liability and equity components under the residual value method. The liability component was measured first, at present value of the stream of interest payments plus present value of the bond maturity value, all discounted at 8% (the interest rate that applies to similar straight bonds). At the time of issuance, the liability component was recorded at $867,000. Wildhorse's tax rate is 30%. Calculate Wildhorse's 2020 diluted earnings per share.
Q3) Carla Vista Corporation reported net income of $288,000 in 2020 and had 220,000 common shares outstanding throughout the year. Also outstanding all year were 60,000 (written) options to purchase common shares at $10 per share. The average market price for the common shares during the year was $15 per share. Calculate the diluted earnings per share.
Q4) Blossom Corporation reported net income of $320,000 in 2020 and had 770,000 common shares outstanding throughout the year. On May 1, 2020, Blossom issued 5% convertible bonds. Each $1,000 bond is convertible into 120 common shares. Total proceeds at par amounted to $1,090,000, and was allocated to the liability and equity components under the residual value method. The liability component was measured first, at present value of the stream of interest payments plus present value of the bond maturity value, all discounted at 8% (the interest rate that applies to similar straight bonds). At the time of issuance, the liability component was recorded at $1,014,000. Blossom's tax rate is 30%. Calculate Blossom's 2020 diluted earnings per share.