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Problem 19-19 EPS; EPS; stock options; nonconvertible preferred; convertible bonds; shares sold [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9]

600 million common shares
20 million 6% cumulative preferred shares, \$50 par
8% convertible bonds, \$2,000 million face amount, convertible into 80 million common shares
The following additional information is available:
• On September 1, 2013, Canaday sold 72 million additional shares of common stock.

Incentive stock options to purchase 60 million shares of common stock after July 1, 2012, at \$12 per share were outstanding at the beginning and end of 2013. The average market price of Canaday’s common stock was \$18 per share during 2013.

Canaday's net income for the year ended December 31, 2013, was \$1,476 million. The effective income tax rate was 40%.

Required:

1.Calculate basic earnings per common share for the year ended December 31, 2013. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2.Calculate the diluted earnings per common share for the year ended December 31, 2013. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Problem 19-19 EPS; EPS; stock options; nonconvertible preferred; convertible bonds; shares sold [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9]

600 million common shares
20 million 6% cumulative preferred shares, \$50 par
8% convertible bonds, \$2,000 million face amount, convertible into 80 million common shares
The following additional information is available:
• On September 1, 2013, Canaday sold 72 million additional shares of common stock.

Incentive stock options to purchase 60 million shares of common stock after July 1, 2012, at \$12 per share were outstanding at the beginning and end of 2013. The average market price of Canaday’s common stock was \$18 per share during 2013.

Canaday's net income for the year ended December 31, 2013, was \$1,476 million. The effective income tax rate was 40%.

Required:
1. Calculate basic earnings per common share for the year ended December 31, 2013. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2. Calculate the diluted earnings per common share for the year ended December 31, 2013. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Solution:
Basic EPS
net
preferred
income
dividends
\$1,476
– \$60*
\$1,416
———————————————— = ——— = \$2.27
4
600
+ 72 ( / )
624
12
shares
new
at Jan. 1
shares...

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