FA58 Problem: Earnings per Share - Tratter Inc
Prof.NandyFA58 Problem: Earnings per Share - Tratter Inc.
The following select financial information relates to Tratter Incorporated (“TI”), a large publiccompany. TI has a December 31 year end.The December 31, 2007 balance sheet includes:
Common shares issued and outstanding: 2,100,000 common shares issued and outstanding.
Convertible bonds outstanding: 5,600 convertible bonds, earning interest at 8.25% per annum, maturing on December 31, 2011. Each bond was issued in the amount of $1000 andis convertible at the rate of one bond for 12 common shares.
Convertible cumulative preferred shares: 315,000 shares issued and outstanding; annualdividends are $ 2.40 per share and each preferred share can be converted into 3 commonshares.
Employee share options outstanding: Two separate series of options were issued toemployees. The first consists of 175,000 options outstanding with an exercise price of $63.00 and the second consists of 140,000 share options outstanding with an exercise price of $82.50.The following items occurred during 2008:
Net income was $5,600,000.
On April 30, 2008, twenty five percent of the convertible bonds were converted into common shares.
The preferred shares dividends were paid on June 30, 2008.
The Board of Directors declared a common share dividend of $0.35 per share on April 15,2008.
The company’s tax rate is 40%.
The common shares had an average annual market value of $70 per share for the year.
Required
Calculate basic and diluted earnings per common share for 2008
FA58 Problem: Earnings per Share - Tratter Inc.
The following select financial information relates to Tratter Incorporated (“TI”), a large publiccompany. TI has a December 31 year end.The December 31, 2007 balance sheet includes:
Common shares issued and outstanding: 2,100,000 common shares issued and outstanding.
Convertible bonds outstanding: 5,600 convertible bonds, earning interest at 8.25% per annum, maturing on December 31, 2011. Each bond was issued in the amount of $1000 andis convertible at the rate of one bond for 12 common shares.
Convertible cumulative preferred shares: 315,000 shares issued and outstanding; annualdividends are $ 2.40 per share and each preferred share can be converted into 3 commonshares.
Employee share options outstanding: Two separate series of options were issued toemployees. The first consists of 175,000 options outstanding with an exercise price of $63.00 and the second consists of 140,000 share options outstanding with an exercise price of $82.50.The following items occurred during 2008:
Net income was $5,600,000.
On April 30, 2008, twenty five percent of the convertible bonds were converted into common shares.
The preferred shares dividends were paid on June 30, 2008.
The Board of Directors declared a common share dividend of $0.35 per share on April 15,2008.
The company’s tax rate is 40%.
The common shares had an average annual market value of $70 per share for the year.
Required
Calculate basic and diluted earnings per common share for 2008
11 years ago
Purchase the answer to view it
ma58.png- ma58_2.png
- ma58_3.png
- ma58_4.png
- ma58_5.png
- ma58_6.png
- ma58_7.png
- ma58_8.png
- ma58_9.png
- ma58_10.png
- ma58_10_2.png
- ma58_11.png
- ma58_12.png
- ma58_13.png
- ma58_14.png
