Reference no: EM132830349

Question -

a) Lorena company reported a net income of P4,123,500 for the year ended December 31, 2019. It has average number of ordinary shares outstanding of 100,000 shares and the income tax rate is 30%. The entity on April 1, 2019 previously issued P1,000,000 12% bonds at face amount. Each P1,000 bond is convertible into 10 ordinary shares.

Compute the basic earnings per share.

Compute the diluted earnings per share.

b) Cecilia company presented the following information On January 1, 2019: Ordinary share capital, P100, 50,000 shares 5,000,000

12% bonds payable issued at face amount, each P1,000 bond is convertible into 20 ordinary shares 2,000,000

On April 1, 2019, bonds with face amount of P1,500,000 were actually converted into ordinary share. The entity reported net income of P1,160,000 and the income tax rate is 30%.

Compute the basic earnings per share.

Compute the diluted earnings per share.