Reference no: EM132844149

Question - ABC Company has a complex capital structure. Below is the information regarding the capital structure of ABC Company.

Average market price of ordinary shares:

The average market price of ordinary shares from January 1, 2021 to September 1, 2021 is P57. While the average market price for the whole year is P60.75.

Ordinary shares: The number of ordinary shares outstanding at the beginning of 2021was 5,000,000. On March 1, 2021, 200,000 ordinary shares were issued for cash.

Convertible bonds: In the last quarter of 2020, 5% convertible bond with a principal amount of P12,000,000 due in 2 years were sold for cash at P1,000 (par). Interest is payable twice a year, on November 1 and May 1. Each P1,000 is convertible into 40ordinary shares. No bonds were converted in 2020. The entire issue was converted on April 1, 2021. Let us assume that the principal amount is equal to the present value of the convertible bond.

Convertible preference shares: In the second quarter of 2020. 800,000 convertible preference shares were issued for assets in a purchase transaction. The quarterly dividend on each convertible preference share is P0.05, payable at the end of the quarter for shares outstanding at that date. Each share is convertible into one ordinary share. Holders of 600,000 convertible preference shares converted their preference shares into ordinary shares on June 1, 2021.

Warrants: Warrants to buy 600,000 ordinary shares at P55 per share for a period of five years were issued on January 1, 2021. All outstanding warrants were exercised on September 1, 2021.

Options: Options to buy 1,500,000 ordinary at P75 per share for a period of 10 years were issued on July 1, 2021. No options were exercised during 2021 because the market price of PURPLE's ordinary share did not rise beyond the option's exercise price.

Tax rate: The income tax rate was 30% for 2021.

Net income for the year ended December 31, 2021: Net income from continuing operations attributable to the parent entity is P11,800,000; Net income attributable to the parent entity is P9,800,000.

Required - Determine the following:

Determine 2021 Basic EPS - Net income from continuing operations.

Determine 2021 Basic EPS - Loss from discontinued operations.

Determine shares deemed to be issued for no consideration because of the share options.

Determine 2021 Diluted EPS - Net income from continuing operations.