Scribd
Upload
38 views

exercise-DEPS (1)

exercises

Uploaded by

Angel Anne Lorraine A. Carranza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
38 views

exercise-DEPS (1)

exercises

Uploaded by

Angel Anne Lorraine A. Carranza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

DILUTED EARNINGS PER SHARE (BEPS)

EXERCISES
-oOo-

PROBLEM 1
(Convertible Bonds Payable)
On January 1, 2023, Munda Co. has 100,000 outstanding ordinary shares. During the
year, Munda Co. reported net income of P5,000,000. Income tax rate is 30%. In
addition, Munda Co. has 4,000, 10% convertible bonds with P1,000 face amount. Each
bond is convertible into five ordinary shares.
REQUIRED:
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, 2023 and there were no conversions made
during the year.
b. Bonds were issued on April 1, 2023 and there were no conversions made
during the year.
c. Bonds were issued in the previous year and were converted on October 1,
2023.
PROBLEM 2
(Convertible Preference Share)
On January 1, 2023, Raymund Co. has 100,000 outstanding ordinary shares. During
the year, Raymund Co. reported net income of P5,000,000. Income tax rate is 30%. In
addition, Raymund Co. has 4,000 issued and outstanding P100 par cumulative
preference shares. The preference shares have a 10% fixed rate and each share is
convertible into five ordinary shares.
REQUIRED:
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. Preference shares issued on January 1, 2023 and there were no conversions
made during the year.
b. Preference shares were issued on April 1, 2023 and there were no
conversions made during the year.
c. Preference shares were issued in the previous year and were converted on
October 1, 2023.
PROBLEM 3
(Share options/warrants)
Francis Co. has the following data for the year 2024:
Net income P 5,000,000
Outstanding shares, January 1 100,000

Employee share options outstanding during the year:


Option shares 20,000
Exercise price P 180
Fair value of each share option 20
Average market price 250
Ending market price 300

REQUIRED:
1. Determine the basic earnings per share for the year.
2. Determine the diluted EPS under each scenario:
a. Options were issued on January 1, 2024 and there was no exercise of options
made during the year.
b. Options were issued on April 1, 2024 and there was no exercise of options
made during the year.
3. Determine the basic EPS and diluted EPS assuming options were issued in the
previous year and were exercised on October 1, 2024 when the market price of
the ordinary shares was P255.
PROBLEM 4
(Multiple Potential Dilutive Securities)
Robert Co. reported net income for the year amounting to P 1,500,000. Below is the list
of securities issued by Robert:
Type of Security Par or face value Description Conversion terms
Ordinary shares P 100 100,000 shares None
10% convertible P 100 50,000 shares 2 shares of ordinary for
preference shares each preference share
10% convertible P 1,000 P1,000,000 40 shares of ordinary
bonds for each P1,000 bond
Additional information:
 All securities had been issued in the previous period.
 The bonds payable are issued at face amount.
 Robert had 10,000 share options outstanding on January 1. The option had an
exercise price and average market price of P150 and P200, respectively.
 The tax rate for the year is 30%.

Required: Compute for BEPS and DEPS for the year.

You might also like