Reference no: EM132956056

Question - Money Inc. (MI) is a publicly accountable enterprise that had 220,000 ordinary shares on January 1, 2020. On March 1, 2020, MI issued at par $400,000 in 10% bonds maturing on January 1, 2028. Each $1,000 bond is convertible into 9 ordinary shares. Assume that the effective interest rate is 10%. There are 5,000 outstanding cumulative preferred shares that are each entitled to an annual dividend of $0.20. Dividends were not declared or paid during 2020. Each preferred share is convertible into three ordinary shares. On July 1, 2020, MI repurchased 5,000 ordinary shares for $10 per share and held them in treasury until July 31, 2020 at which point they were canceled. On November 1, 2020, SSI issued a stock dividend to ordinary shareholders of 20%.

MI's comprehensive income for the year ended December 31, 2020, was $250,000 which included OCI of $50,000. Its income tax rate was 35%.

Required -

a. Calculate SSI's basic EPS for 2020.

b. Are the convertible bonds dilutive or anti-dilutive in nature? The convertible preferred shares?

c. Calculate SSI's diluted EPS for 2020.