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Financial Accounting and Reporting Valix/Valix/Escala/Santos/Dela Cruz

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May Jailani
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101 views

Financial Accounting and Reporting Valix/Valix/Escala/Santos/Dela Cruz

Fr

Uploaded by

May Jailani
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

FINANCIAL ACCOUNTING AND REPORTING VALIX/VALIX/ESCALA/SANTOS/DELA CRUZ


BATCH 92 OCTOBER 2022 CPLE
DILUTED EARNINGS PER SHARE
1. An entity had 200,000 P50 par value ordinary shares outstanding on January 1, 2022. In addition, on
January 1, 2022, the entity had issued 30,000 convertible cumulative 10% preference shares with P100
par. These preference shares were converted on September 1, 2022. Each preference share was converted
into 5 ordinary shares. The preference dividends for the entire year were paid in full before the conversion.
The entity had no other potentially dilutive securities. Net income for the current year was P5,000,000.
1. What amount should be reported as basic earnings per share?
a. 18.80
b. 20.00
c. 23.50
d. 25.00
2. What amount should be reported as diluted earnings per share?
a. 14.29
b. 20.00
c. 18.80
d. 10.00
2. An entity had 200,000 ordinary shares outstanding on January 1, 2022. On January 1, 2022, the entity
had issued convertible 8% bonds with face amount of P5,000,000.
The bond as were converted on October 1, 2022 and 40 ordinary shares were issued in exchange for every
P1,000 bond. Net income for current year was P6,000,000. The income tax rate is 25%.
1. What amount should be reported as of basic earnings per share?
a. 30.00
b. 17.14
c. 24.00
d. 15.00
2. What amount should be reported as of diluted earnings per share?
a. 15.56
b. 16.00
c. 15.00
d. 15.75
3. An entity had 200,000 ordinary shares issued and outstanding on January 1, 2022.
Unexercised share options to purchase 50,000 ordinary shares at P20 per share were outstanding at the
beginning and end of 2022.
The average market price of ordinary share was P25 during 2022. Net income for the current year was
P6,000,000. On July 1, 2022, the entity issued a 20% share dividend. The income tax rate is 25%.
1. What amount should be reported as basic earnings per share?
a. 27.27
b. 25.00
c. 33.33
d. 30.00
2. What amount should be reported as diluted earnings per share?
a. 24.00
b. 23.81
c. 26.09
d. 25.86

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4. On January 1, 2022, an entity reported 100,000 ordinary shares outstanding. The shareholders’ equity
was affected by the following transactions during 2022.

July 1 Issued P2,000,000, 5-year, 10% bonds at face amount. Each P1,000 bond
is convertible into 50 ordinary shares.
July 1 40,000 ordinary shares were sold.
October 1 A 10% bonus issue was declared and distributed.
December 31 Net income for 2022 was P3,000,000. The income tax rate is 25%.
1. What amount should be reported as basic earnings per share?
a. 22.73
b. 26.43
c. 21.13
d. 23.08
2. What amount should be reported as diluted earnings per share?
a. 16.44
b. 17.08
c. 16.90
d. 16.58

5. An entity reported the following information on December 31, 2022:

Ordinary share capital 200,000 shares


Convertible noncumulative preference share capital 20,000 shares
10% convertible bonds payable P5,000,000
Share options to purchase 100,000 shares at P15 were outstanding. Market price of ordinary share was
P25 on December 31, 2022 and averaged P20 during the year. The entity paid the annual preference
dividends of P40 per share. The preference shares are convertible into 40,000 ordinary shares. The 10%
bonds are convertible into 25,000 ordinary shares. The net income for 2022 is P8,000,000. The income
tax rate is 25%.
1. What amount should be reported as basic earnings per share?
a. 36.00
b. 40.00
c. 35.56
d. 26.67
2. What amount should be reported as diluted earnings per share?
a. 32.00
b. 30.30
c. 28.88
d. 28.19

End

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