WACC DENOMINATOR

Helen Company provided the following share transactions for the current year :

January 1 Shares outstanding 44,000

February 1 Issued for cash 56,000
May 1 Acquired treasury shares 25,000
August 1 25% stock dividend
September 1 Resold treasury shares 10,000
November 1 Issued 3 for 1 share split

What is the weighted average number of shares for EPS computation?

CASE 2

Wiz na Pera Company had P250,000 ordinary shares outstanding on January 1, 2020.

During 2020 and 2021 , the following transactions took place

2020 March 1 Sold 24,000 shares

July 1 Issued a 20 percent stock dividend

October 1 Sold 16,000 shares

December 1 Purchased 15,000 shares to be held in treasury

2021 June 1 3 for 1 share split

September 1 Sold 60,000 shares

1.) What is the amount of weighted average number of shares for 2020 to be used in earnings per share
computation for comparative financial statements at the end of 2021 ?

2.) What is the weighted average number of shares for 2021 to be used in the earnings per share
computation financial statements at the end of 2021?

( Continuation )

1. If the Company reported net income of P500,000 for the year ended December 31,2021 and it has
Preference share capital , P10 par, 4% cumulative , 25,000 shares issued and outstanding. How much is
the Basic Earnings per Share

2. Assuming that the shares are non-cumulative and the company did not declare any dividend during
2021, how much is the basic earnings per share on 2021
DILUTED EARNINGS PER SHARE

CONVERTIBLE BONDS

Fortuner Company had 200,000 ordinary shares outstanding on January 1 , 2020. On January 1 , 2020,
the entity had issued 4,000 convertible 10% bonds with P1,000 face value.

The bonds were converted on October 1, 2020 and 40 ordinary shares were issued in exchange for each
bond. Net Income was P5,000,000. The income tax rate is 30%

1. What is the amount of basic earnings per share ?

2. What is the amount of diluted earnings per share ?

CONVERTIBLE PREFERENCE SHARES

On January 1, 2020 , Frown Company has 2,000,000 ordinary shares outstanding. In addition, on January
1, 2020, the entity issued 500,000 preference shares which were convertible into 300,000 ordinary
shares.

During the year, the entity declared and paid P1,000,000 cash dividend on the ordinary shares and
P800,000 cash dividend on the preference shares. The income for the current year was P6,500,000

1.) What amount should be reported as basic earnings per share ?

2.) What amount should be reported as diluted earnings per share ?

Assuming that Convertible Preference Shares were issued on July 1, 2020

1.) What amount should be reported as basic earnings per share ?

2.) What amount should be reported as diluted earnings per share ?

WRITTEN PUT OPTIONS

An Entity has outstanding 20,000 written put options on ordinary shares with an exercise price of P350.
The average market price of ordinary shares for the period is P280. In calculating diluted earnings per
share, how many incremental ordinary shares should be included as a result of written put options?

MULTIPLE POTENTIAL ORDINARY SHARES

Camiguin Company reported the following capital structure on December 31, 2020

Ordinary Share capital 110,000 shares

Convertible noncumulative preference share capital 20,000 shares

10% convertible bonds payable P2,000,000

Share options to purchase 20,000 shares at P15 were outstanding. Market price of Camiguin share was
P22 at December 31, 2020 and averaged P20 during the year.

No value was assigned to the share options. The entity paid the annual dividend of P5 on the preference
share.

The preference shares are convertible into 40,000 ordinary shares, the 10% bonds are convertible into
30,000 ordinary shares

The net income for the year is P650, 000. The income tax rate is 30%

1.) What Basic EPS shall be presented during 2020?

2.) What Diluted EPS shall be presented during 2020?