Chapter 16: Q22E (page 879)
(EPS with Convertible Bonds, Various Situations) In 2016, Chirac Enterprises issued, at par, 60
Instructions
a) Compute diluted earnings per share for 2017.
b) Assume the same facts as those assumed for part (a), except that the 60 bonds were issued on September 1, 2017 (rather than in 2016), and none have been converted or redeemed. Compute diluted earnings per share for 2017.
c) Assume the same facts as assumed for part (a), except that 20 of the 60 bonds were actually converted on July 1, 2017. Compute diluted earnings per share for 2017.
Short Answer
Diluted earnings per share
a) $0.6825
b) $1.365
c) $0.6825