Reference no: EM133020912
Question - Financial Reporting - Company B (CB) had the following equity structure on December 31, 2020:
Number of outstanding common shares 400,000
Number of convertible preferred shares 11,000
($3.50 dividend, cumulative, each can be converted into 2 common shares)
Additional information:
CB has $ 1,000,000 in convertible bonds paying 7%. These were issued at par. Each $ 1,000 bond can be converted into 50 common shares
CB has $ 2,000,000 in convertible bonds paying 6%. These were also issued at par. Each $ 1,000 bond can be converted into 60 common shares
CB has outstanding warrants that allow investors to purchase 22,000 common shares of CB at $61.75 per share
CB has outstanding stock options that allow investors to purchase 40,000 common shares of CB at $30/share
On March 1, 2021, CB declared and distributed a two-for-one stock split.
CB issued 2,000 common shares on April 1, 2021. These shares were issued since previously contingent conditions had been fully met on this date.
On October 1, 2021, CB issued 40,000 common shares for $50 each.
CB Net income was $1,500,000 for the year ended December 31, 2021.
The convertible bonds and preference shares have been outstanding the entire year.
The market price of the common shares of CB at December 31, 2021 was $ 58.
No conversions of preference shares or bonds occurred during 2021.
The company's tax rate is 40% and the common shares' average market price for the year was $60.
No dividends have been declared or paid in 2018, 2019, 2020 or 2021.The last dividend payment was in 2017.
Required - Calculate basic and diluted EPS for 2021 using IFRS.