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Unformatted text preview: calculation of diluted earnings per share. PROBLEM 17-13 (Continued) For purposes of the calculating the individual earnings per share for the convertible bonds, to decide if there may be further dilution, the bonds are assumed to have been converted January 1, 2011. The income effect would be to add back the after tax cost of the interest saved of $250,000 and the denominator effect is to increase the number of shares by 50,000 (100,000 shares X 6/12). This yields an EPS of $5.00 ($250,000 / 50,000) which is antidilutive and therefore excluded. (b) Earnings per common share : Basic earnings per share $1.24 Diluted earnings per share $1.24 Disclaimer: For simplicity, ignore the IFRS requirement to record the debt and equity components of the bonds separately....
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- Spring '11
- Corporate Finance