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Test2 - Test 2 Name Accounting 3312 Row Instructions You...

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Test 2 Name: ___________________ Accounting 3312 Row: Instructions: You are to do the 3 problems (1-3) or you may omit one of the problems of your choice and do in its place the 11 multiple choice problems. Do not do all, I will only grade the first three attempted. 1. A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is 2. Dilutive convertible securities must be used in the computation of A) basic earnings per share only. B) diluted earnings per share only. C) diluted and basic earnings per share. D) none of these. 3. In the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed reacquisition of common stock at the average market price during the period. If the exercise price of the options or warrants exceeds the average market price, the computation would Use the following to answer questions 4-5: Oliver Company purchased $400,000 of 10% bonds of McGee Co. on January 1, 2008, paying $376,100. The bonds mature January 1, 2018; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Oliver Company uses the effective- interest method and plans to hold these bonds to maturity.
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