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  • The Following Information Relates To The December 31 2014 Balance

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    Muhammad Shahid
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    The document provides financial information for Chiapucci Incorporated's balance sheet as of December 31, 2014, including $1 million in convertible debentures, $1.32 million in common stock, and $842,000 in retained earnings. In 2015, the debentures were converted to common stock in August, and the company reported $540,000 in net income for the year with a 30% tax rate. The document asks to calculate basic and diluted EPS for 2015 and explain why the convertible debentures would be antidilutive under a loss condition of $220,000.

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    The Following Information Relates to the December 31 2014 Balance

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    The document provides financial information for Chiapucci Incorporated's balance sheet as of December 31, 2014, including $1 million in convertible debentures, $1.32 million in common stock, and $842,000 in retained earnings. In 2015, the debentures were converted to common stock in August, and the company reported $540,000 in net income for the year with a 30% tax rate. The document asks to calculate basic and diluted EPS for 2015 and explain why the convertible debentures would be antidilutive under a loss condition of $220,000.

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    © All Rights Reserved
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    4 views1 page

    The Following Information Relates To The December 31 2014 Balance

    Uploaded by

    Muhammad Shahid
    The document provides financial information for Chiapucci Incorporated's balance sheet as of December 31, 2014, including $1 million in convertible debentures, $1.32 million in common stock, and $842,000 in retained earnings. In 2015, the debentures were converted to common stock in August, and the company reported $540,000 in net income for the year with a 30% tax rate. The document asks to calculate basic and diluted EPS for 2015 and explain why the convertible debentures would be antidilutive under a loss condition of $220,000.

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    © All Rights Reserved
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    The following information relates to the December 31 2014

    balance #6511
    The following information relates to the December 31, 2014, balance sheet for Chiapucci
    Incorporated.6% convertible 10-year debentures issued at par . . . . . . . . . . . . . . . . . . . . . . .
    $1,000,000Common stock, $12 par, 110,000 shares issued and outstanding . . . . . . . . . .
    $1,320,000Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    842,000Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    $2,162,000The convertible debentures include terms stating that each $1,000 bond can be
    converted into 30 shares of common stock.The following events occurred during 2015.(a) On
    August 31, 2015, the complete issue of convertible debentures was converted into common
    stock.(b) Chiapucci reported net income of $540,000 in 2015. The company's income tax rate
    was 30%.(c) No other common stock transactions took place during the year other than the
    debenture conversion.Instructions:1. Compute basic and diluted EPS for the year ended
    December 31, 2015.2. Assume that Chiapucci had a net loss of $220,000. Show why the
    convertible debentures are Antidilutive under loss conditions.View Solution:
    The following information relates to the December 31 2014 balance

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