Question

A company issued 10,000, $1,000 face value, 10%, 10-year convertible bonds on January 1, 20x1 at...

A company issued 10,000, $1,000 face value, 10%, 10-year convertible bonds on January 1, 20x1 at 102. The firm's tax rate is 30%. Assuming straight-line amortization for bond premiums and discounts, the addition to the numerator for purposes of computing diluted earnings per share for the year ended December 31, 20x1 is

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The amount to be added to the numerator for purposes of computing diluted earnings per share for the year ended December 31, 20x1

The amount to be added to the numerator is the after-tax interest expenses for the Bond for the year

The amount to be added to the numerator = After-tax interest expense for the Year

= [Number of Bond x Face Value per share x Annual interest rate] x (1 – Tax rate]

= [10,000 Bonds x $1,000 x 10.00%] x (1 – 0.30)

= $1,000,000 x 0.70

= $700,000

Hence, the amount to be added to the numerator will be $700,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 1, 2020, a company issued 10-year, $800,000 face value, 7% bonds, at par. Each...
On January 1, 2020, a company issued 10-year, $800,000 face value, 7% bonds, at par. Each $1,000 bond is convertible into 20 shares of the company’s common stock. The company’s net income in 2020 was $500,000, and its tax rate was 22%. The company had 100,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. What is the numerator for computing diluted earnings per share for the company for 2020?
On January 1, Year 1, Jones Company issued bonds with a $190,000 face value, a stated...
On January 1, Year 1, Jones Company issued bonds with a $190,000 face value, a stated rate of interest of 8.0%, and a 5-year term to maturity. The bonds were issued at 97. Interest is payable in cash on December 31st of each year. The company amortizes bond discounts and premiums using the straight-line method. What is the total amount of liabilities shown on Jones' balance sheet at December 31, Year 1?
On January 1, 2017, Martinez Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each...
On January 1, 2017, Martinez Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Martinez common stock. Martinez’s net income in 2017 was $302,000, and its tax rate was 40%. The company had 95,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (b) Compute diluted earnings per share for 2017, assuming the same facts as...
On January 1, 2020, Ivanhoe Inc. issued $2.05 million of face value, five–year, 7% bonds at...
On January 1, 2020, Ivanhoe Inc. issued $2.05 million of face value, five–year, 7% bonds at par. Each $1,000 bond is convertible into 14 common shares. Ivanhoe’s net income in 2020 was $249,000, and its tax rate was 35%. The company had 94,000 common shares outstanding throughout 2020. None of the bonds were exercised in 2020. For simplicity, ignore the requirement to record the bonds’ debt and equity components separately. (a) Calculate diluted earnings per share for the year ended...
On January 1, 2017, Vaughn Company issued 10-year, $2,150,000 face value, 6% bonds, at par. Each...
On January 1, 2017, Vaughn Company issued 10-year, $2,150,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Vaughn common stock. Vaughn’s net income in 2017 was $305,000, and its tax rate was 40%. The company had 97,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $...
On January 1, 2020, Windsor Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each...
On January 1, 2020, Windsor Company issued 10-year, $2,010,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 15 shares of Windsor common stock. Windsor’s net income in 2020 was $518,400, and its tax rate was 20%. The company had 108,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $...
On January 1, Year 1, Victor Company issued bonds with a $450,000 face value, a stated...
On January 1, Year 1, Victor Company issued bonds with a $450,000 face value, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds sold at 95. Interest is payable in cash on December 31 of each year. Victor uses the straight-line method to amortize bond discounts and premiums. What is the amount of interest expense appearing on the income statement for the year ending December 31, Year 3? Group of answer choices $31,500 $22,500...
On January 1, 2020, Shamrock Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each...
On January 1, 2020, Shamrock Company issued 10-year, $1,880,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Shamrock common stock. Shamrock’s net income in 2020 was $391,300, and its tax rate was 20%. The company had 91,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $enter...
On January 1, 2020, Skysong Company issued 10-year, $1,890,000 face value, 6% bonds, at par. Each...
On January 1, 2020, Skysong Company issued 10-year, $1,890,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Skysong common stock. Skysong’s net income in 2020 was $470,000, and its tax rate was 20%. The company had 94,000 shares of common stock outstanding throughout 2020. None of the bonds were converted in 2020. (a) Compute diluted earnings per share for 2020. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share $enter...
On January 1, 2017, Andrew and Sons issued 10-year, $2,060,000 face value, 6% bonds, at par....
On January 1, 2017, Andrew and Sons issued 10-year, $2,060,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 16 shares of Andrew common stock. Andrew’s net income in 2017 was $294,000, and its tax rate was 40%. The company had 101,000 shares of common stock outstanding throughout 2017. None of the bonds were converted in 2017. (a) Compute diluted earnings per share for 2017. (Round answer to 2 decimal places, e.g. $2.55.) Diluted earnings per share...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT