Solution-Determine the amount of diluted earnings per share

Determine the amount of diluted earnings per share

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Question - On January 1, 2X16, Manila Co. has 100,000 outstanding ordinary shares. During the year, Manila Co. reported a net income of P5,000,000. The income tax rate is 30%. Besides, Manila Co. has 4,000, 10% convertible bonds with 1,000 face amount. Each bond is convertible into five (5) ordinary shares.

Required - Solve for the following:

1. Determine the amount of basic earnings per share for the year.

2. Determine the amount of diluted earnings per share under each of the following scenarios.

a. Bonds were issued on January 1, 2X16, and there were no conversions made during the year.

b. Bonds were issued on April 1, 2X16, and there were no conversions made during the year.

c. Bonds were issued in the previous year and were converted on October 1, 2X16.

Reference no: EM132718460

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Determine the amount of diluted earnings per share

Reference no: EM132718460

Reference no: EM132718460

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