How much is the diluted earnings per share

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Reference no: EM132849291

Question 1. Everlasting Company discovered the following errors in its financial records at the beginning of the year 2015:

-The physical inventory count on December 31, 2014 excluded a merchandise with a cost of P39,000 that had been temporarily stored in a public warebouse. Everlasting uses the periodic inventory system.

- During 2014, a competitor filed a patent infringement suit against Everlasting claiming damages of P440,000. The company's legal counsel has indicated that an unfavorable verdict is probable and a reasonable estimate of the court's award to the competitor is P250.000 The company has not reflected or disclosed this situation in the financial statements.

-. A trademark was acquired at the beginning of 2013 for P100,000. No amortization has been recorded since acquisition. It is the company's policy to amortize all intangibles with a definite life or a maximum of 20 years. At the time of acquisition, the trademark was estimated to have a definite life of 20 years.

QUESTION: The January 1, 2015 accumulated profits is understated or overstated by?

Question 2. INRI Corporation has the following capital structure at January 1,2014:
Ordinary share, par P10 800,000 shares
Liability component of 5-year 10% convertible
bonds, each 1,000 bond is convertible into 80
shares of ordinary share P5,162,550
Share premium - conversion option 205,000

The bonds were issued on January2, 2010 and at the time of issue the bonds were selling at rate of interest of 9% without the conversion option.

During 2014, the company had the following stock transactions:
May 1 Issued 60,000 shares of ordinary share at P30 per share
August 1 Purchased 120,000 shares of treasury at P35 per share
Dec 31 Converted P2,000,000 bonds
Net income for 2014 was P950,000 Income tax rate is 32%.

QUESTION: How much is the diluted earnings per share?

Reference no: EM132849291

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