Calculate ivanhoe diluted earnings per share

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Ivanhoe Corporation reported net income of $314,000 in 2020 and had 850,000 common shares outstanding throughout the year. On May 1, 2020, Ivanhoe issued 5% convertible bonds. Each $1,000 bond is convertible into 120 common shares. Total proceeds at par amounted to $930,000, and was allocated to the liability and equity components under the residual value method. The liability component was measured first, at present value of the stream of interest payments plus present value of the bond maturity value, all discounted at 8% (the interest rate that applies to similar straight bonds). At the time of issuance, the liability component was recorded at $855,000. Ivanhoe's tax rate is 30%.

Problem 1: Calculate Ivanhoe's 2020 diluted earnings per share.

Reference no: EM132737483

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