FAR04-13.2 - SBPT BVPS EPS - Revised

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
SHARE BASED COMPENSATION
I. Key Terms and Definitions:
a) Cash-settled share-based payment transaction - A share-based payment transaction in which

the entity acquires goods or services by incurring a liability to transfer cash or other assets to
the supplier of those goods or services for amounts that are based on the price (or value) of the
entity’s shares or other equity instruments of the entity.
b) Equity-settled share-based payment transaction - The entity receives goods or services as

consideration for equity instruments of the entity including shares or share options.
c) Intrinsic value - The difference between the fair value of the shares to which the counterparty has
the (conditional or unconditional) right to subscribe or which it has the right to receive, and the price
(if any) the counterparty is (or will be) required to pay for those shares.
d) Share option - A contract that gives the holder the right, but not the obligation, to subscribe to the
entity’s shares at a fixed or determinable price for a specified period of time. Share options granted
to officers and employees are recognized as compensation expense.
e) Vest - To become an entitlement or exercisable. Under a share-based payment arrangement, a

counterparty’s right to receive cash, other assets or equity instruments of the entity vests when the
counterparty’s entitlement is no longer conditional on the satisfaction of any vesting conditions.
f) Vesting conditions - Determines whether the entity receives the services that entitle the
counterparty to receive cash, other assets or equity instruments of the entity, under a share-based
payment arrangement. Conditions can either one or both of the following:
a. Service conditions require the counterparty to complete a specified period of service and/or
b. Performance conditions require the counterparty to complete a specified period of service and
specified performance targets to be met.
g) Vesting period - The period during which all the specified vesting conditions of a share-based
payment arrangement are to be satisfied.
II. Measurement of Compensation for Share Options
1. Fair Value Method – The compensation expense shall be computed by using the fair value of the share
options at grant date multiplied by the number of options that actually vest and allocate as expense
over the vesting period.
But if the share options vest immediately and are granted for past services, compensation expense is
recognized immediately.
2. Intrinsic Value Method – Alternatively used if the fair value of the share option cannot be estimated
reliably.
The intrinsic value is measured at the end of each reporting period and the date the share options are
exercised with the corresponding expensed recognized on those dates.
Unlike the fair value method, compensation expense is recognized beyond the vesting period.
1|P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
III. Share Appreciation Rights
1. A cash bonus plan given to officers and employees that entitles the grantees payment equal to the
appreciation of the market value of the shares over a predetermined price based on a stated number of
shares on the date of exercise.
2. If the share appreciation right is granted for past services, compensation expense shall be recognized
immediately, otherwise it shall be allocated during the vesting period by using the appreciation at end of
the reporting period as an estimate of the value on the date of exercise.
3. Changes in value of the liability shall be only recognized in profit or loss including decreases in value and
recorded as a “gain on reversal” of share appreciation right.
IV. If the share-based payment transaction whether equity or cash settled is granted for past services and
exercisable immediately, the total fair value in the period of grant shall be recognized in full.
V. Modifications to the terms and conditions on which equity instruments were granted
(a) The entity shall account for the cancellation or settlement as an acceleration of vesting, and shall
therefore recognize immediately the amount that otherwise would have been recognized for services
received over the remainder of the vesting period.
(b) The conversion to a payment made to the employee on the cancellation or settlement of the grant shall
be accounted for as the repurchase of the equity interest. The excess of the payment made from the fair
value recognized in equity shall be recognized as an expense.
VI. Share-based payment transactions in which the terms of the arrangement provide the counterparty
with a choice of settlement
(a) For transactions with parties other than employees, in which the fair value of the goods or services
received is measured directly, the entity shall measure the equity component of the compound financial
instrument as the difference between the fair value of the goods or services received and the fair
value of the debt component, at the date when the goods or services are received.
(b) For other transactions, including transactions with employees, the entity shall measure the fair value
of the compound financial instrument at the measurement date, taking into account the terms and
conditions on which the rights to cash or equity instruments were granted.
In other words, the compound financial instrument shall be measured using the fair value of the share
alternative at grant date.
(c) At the date of settlement, the entity shall remeasure the liability to its fair value. If the entity issues equity
instruments on settlement rather than paying cash, the liability shall be transferred direct to equity,
as the consideration for the equity instruments issued.
(d) If the entity pays in cash on settlement rather than issuing equity instruments, that payment shall be
applied to settle the liability in full.
Any equity component previously recognized shall remain within equity. By electing to receive cash on
settlement, the counterparty forfeited the right to receive equity instruments.
However, this requirement does not preclude the entity from recognizing a transfer within equity, ie a
transfer from one component of equity to another.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
MULTIPLE CHOICE PROBLEMS
1. On January 1, 2022, Mater Company established a fixed share option plan for its senior employees. A total
of 150,000 options were granted to the senior employees that permit them to purchase 150,000 shares of
the company’s P50 par share capital at P80 per share. Each option had a fair value of P10 on the grant date
while the shares had a fair value of P100.
Options are exercisable immediately and can be exercised anytime until December 31, 2024. The market
price for Mater Company share capital on balance sheet date was P140. The company uses the fair value
method of determining the value of the options.
1. What is the compensation expense that Mater Company should recognize in 2022?
a. 3,000,000 c. 1,500,000
b. 4,500,000 d. 2,000,000
2. What is the share premium if employees exercise all the share options on December 31, 2022?
a. 9,750,000 c. 6,000,000
b. 7,500,000 d. 8,250,000
2. Irish Company granted 50,000 share options its five directors on January 1, 2022. The options vest on
January 1, 2025. The fair value of each option on January 1, 2022 is P30 and it is anticipated that all of the
share options will vest on January 1, 2025. What will be the increase in expense and equity for the year
ended December 31, 2022?
a. 1,500,000
b. 1,000,000
c. 375,000
d. 500,000
3. Bryan Company has granted share options to its employees with a fair value of P6,000,000. The options
vest in three years. The Monte-Carlo model was used to value the options. On January 1, 2020, which is
the date of grant, the estimate of employees leaving the company during the vesting period is 5%. On
January 1, 2021, the estimate of employees leaving before the vesting date is revised to 10%. On December
31, 2022, only 6% of the employees actually left the company. What would be the compensation expense
for the year 2022?
a. 2,050,000
b. 1,960,000
c. 1,800,000
d. 2,040,000
4. On January 1, 2022, Mickey Company granted share options to each of its 300 employees working in the
sales department. The share options vest at the end of a three-year period provided that the employees
remain in the company’s employ and provided the volume of sales will increase by more than 10% per year.
The fair value of each share option on grant date is P30.
If the sales increase by more than 10%, each employee will receive 200 share options. If the sales increase
by more than 15%, each employee will receive 300 share options.
On December 31, 2022, the sales increased by more than 10%, and no employees have left the company.
On December 31, 2023, sales increased by more than 10% and 20 employees have left. On December 31,
2024, sales once again increased by more than 15% and 30 additional employees left the company. How
much is the compensation expense that should be recognized for the year 2024?
a. 1,200,000
b. 1,130,000
c. 900,000
d. 2,250,000
Mobile : 0927 283 8234
Telephone : (043) 723 8412
5. Alvin Company has granted share options to its employees. The total compensation expense to the vesting
date of December 31, 2023, has been calculated at P5,000,000. The entity has decided to settle the award
a year earlier than originally planned on December 31, 2022. The amount of compensation expense charged
since the date of grant on January 1, 2020, was P1,000,000 for 2020 and P1,800,000 for 2021. The
compensation expense that was calculated initially for 2022 is P1,500,000.
1. What is the compensation expense for 2022?
a. 2,200,000
b. 1,500,000
c. 700,000
d. 0
2. What is the compensation expense for 2022, assuming the share options are not exercised but instead,
the entity paid the employees P4,500,000 on December 31, 2022?
a. 2,200,000
b. 1,500,000
c. 1,700,000
d. 0
6. On January 1, 2020, Brenda Company granted its employees an option to purchase 50,000 shares of Brenda
P50 par value share capital at P100 per share. The option became exercisable on December 31, 2021, after
employees complete two years of service. The fair value of the share options cannot be measured reliably
on the date of grant. The options were exercised on December 31, 2022. The market prices of Brenda’
shares were:
Jan. 1, 2020 100

Dec. 31, 2020 140
Dec. 31, 2021 175
Dec. 31, 2022 190
What is the amount of compensation expense to recognized by Brenda for 2022?

a. 1,000,000
b. 1,250,000
c. 750,000
d. 2,750,000
7. On January 1, 2020, Sebastian Corporation established a share appreciation rights plan for its executives.
It entitled them to receive cash at any time after three years starting January 1, 2023, for the difference
between the market price of its ordinary shares and a pre-established price of P100 on 50,000 shares. The
share appreciation rights are exercisable until December 31, 2024. Current market prices of the shares are
as follows:
December 31, 2020 112 per share

On December 31, 2023, Sebastian’s executives exercise 20,000 share appreciation rights. What amount of
compensation expense should Sebastian recognize for the year ended December 31, 2022?
a. 600,000
b. 400,000
c. 225,000
d. 500,000
Mobile : 0927 283 8234
Telephone : (043) 723 8412
8. On January 1, 2021, Blake Company granted its president 50,000 share appreciation rights for past services.
These rights are exercisable immediately and expire on December 31, 2022. On exercise, the president is
entitled to receive cash for the excess of the share’s market price on the grant date. The president did
not exercise any of the rights during 2021. The market price of the share was P100 on January 1, 2021,
P115 on December 31, 2021, and P110 on December 31, 2022. As a result of the share appreciation rights,
Blake should recognize a gain on the settlement of the share appreciation right of how much?
a. 500,000
b. 100,000
c. 250,000
d. 0
9. On January 1, 2020, Larsen Company granted to an employee the right to choose either shares or cash
payment. The choices are as follows:
* Share alternative – equal to 20,000 shares with a par value of P30.

* Cash alternative – cash payment equal to the market value of 25,000 shares.
The grant is conditional upon the completion of three years’ service. On grant date, on January 1, 2020, the
share price is P35. After taking into account the effect of vesting restrictions, Larsen Company has estimated
that the fair value of the share alternative to be P58.
1. What is the 2018 compensation expense if the share price on December 31, 2020, is P42?
a. 1,050,000
b. 425,000
c. 350,000
d. 445,000
a. 950,000
b. 675,000
c. 600,000
d. 695,000
a. 770,000 c. 675,000
b. 600,000 d. 750,000
4. What is the share premium if employees choose the share alternative?

a. 1,500,000 c. 1,025,000
b. 1,250,000 d. 1,310,000
5. What is the share premium if the employees choose the cash alternative?
a. 300,000 c. 450,000
b. 225,000 d. 285,000
10. Willis Company purchased inventory from a supplier on June 30, 2022 with a cash price of P3,000,000 to be
paid on December 31, 2022. The supplier was given the option to choose 20,000 share with a fair value of
P130 per share and a par value of P100 or a cash payment based on the fair value of the same 20,000
shares on December 31, 2022. The fair value of the shares on December 31, 2022 was P160 per share.
What was the amount of interest expense if the counter party selected the cash alternative on December 31,
2022?
a. 600,000
b. 200,000
c. 400,000
d. 0
Mobile : 0927 283 8234
Telephone : (043) 723 8412
BOOK VALUE PER SHARE
I. Book value per share is the amount of cash that each share will receive if the company is liquidated, and the
assets are realized at their book values. Therefore, the amount of cash left after paying for the liabilities will
be the balance of shareholders’ equity. The formula of book value per share if the entity has a simple capital
structure will be:
Shareholders’ Equity
Number of outstanding shares
II. If the entity has outstanding preference shares, the preference shareholders’ equity shall be computed
first then the balance shall be the ordinary shareholders’ equity. Preference shareholders’ equity is computed
as follows:
Par value of preference shares xx

Liquidation premium xx
Liquidation value of preference shares xx
Preferred dividends xx
Preference shareholders’ equity xx
Divided by preference shares outstanding xx
Book value per preference share xx
a. If the there is no liquidation premium, the liquidation value is the par value of the shares.
b. The preferred dividends shall be the total dividends in arrears at the reporting date if the preference
shares are cumulative. If the preference shares are non-cumulative, dividends for one year shall be
computed. This rule shall also apply if the problem is silent to the type of preference shares.
c. The cumulative preference dividends shall include the current year, therefore there is no need to compute
for an additional year of preferred dividends in case the problem gives the amount of dividends in arrears.
d. If dividends have been paid or updated during the current year. Preferred dividends shall be excluded
from the preference shareholders’ equity.
III. The book value per ordinary share shall be computed as follows:
Total shareholders’ equity xx

Less: Preference shareholders’ equity xx
Ordinary shareholders’ equity xx
Divided by ordinary shares outstanding xx
Book value per ordinary share xx
a. If there are subscribed shares with a corresponding subscription receivable, the subscription receivable
shall not be deducted from shareholders’ equity based on the assumption that the subscribers shall pay
for their unpaid balances.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
EARNINGS PER SHARE
I. Key Definitions
Earnings per share Profit accruing to ordinary shareholders for each share held.
Diluted earnings Lowest possible EPS from the assumed exercise of potential ordinary
per share shares.
Most dilutive
Lowest incremental EPS from dividing the “Net Income Adjustment” by the
potential ordinary
number of incremental ordinary shares
share
Also known as a common share or common stock. An equity instrument that

Ordinary share
is subordinate to all other classes of equity shares.
Financial instrument or other contract that may entitle its holder to ordinary
Potential ordinary
shares. Includes convertible debt, convertible preference shares, share
share
warrants, share options and written put options
Options and Financial instruments that give the holder the right to purchase ordinary
warrants shares.
Contingent share Agreement to issue shares that is dependent on the satisfaction of specified
agreement conditions.
Contingently
Ordinary shares issuable for little or no cash or other consideration upon the
issuable ordinary
satisfaction of specified conditions in a contingent share agreement.
shares
Contracts that give the holder the right to sell ordinary shares at a specified
Put options
price for a given period.
Increase in earnings per share or a reduction in loss per share resulting from
the assumption that convertible instruments are converted, that options or
Antidilution
warrants are exercised, or that ordinary shares are issued upon the
satisfaction of specified conditions.
Reduction in earnings per share or an increase in loss per share resulting

from the assumption that convertible instruments are converted, that options
Dilution
or warrants are exercised, or that ordinary shares are issued upon the
satisfaction of specified conditions.
II. Requirement to Present EPS
a) An entity whose securities are publicly traded (or that is in process of public issuance) must present, on
the face of the income statement, basic and diluted earnings per share for:
• Profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity;
and
• Profit or loss attributable to the ordinary equity holders of the parent entity for the period for each class
of ordinary shares that has a different right to share in profit for the period.
b) Basic and diluted earnings per share must be presented with equal prominence for all periods presented,
including loss per share.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
c) If an entity reports a discontinued operation, basic and diluted amounts per share must be disclosed for
the discontinued operation either on the face of the income statement or in the notes to the financial
statements.
III. Basic EPS
a) Basic EPS is calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity
(the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during
the period.
b) The earnings numerators (profit or loss from continuing operations and net profit or loss) used for the
calculation should be after deducting all expenses including taxes, minority interests, and preference
dividends.
c). The denominator is calculated by adjusting the shares in issue at the beginning of the period by the number
of shares bought back or issued during the period, multiplied by a time-weighting factor.
d) Contingently issuable shares are included in the basic EPS denominator if the contingency has been met.
IV. Diluted EPS
a. Diluted EPS is calculated by adjusting the earnings and number of shares for the effects of dilutive options
and other dilutive potential ordinary shares. The effects of anti-dilutive potential ordinary shares are
ignored in calculating diluted EPS.
b. Guidance on Calculating Dilution
 Convertible securities. The numerator should be adjusted for the after-tax effects of dividends and
interest charged in relation to dilutive potential ordinary shares and for any other changes in income
that would result from the conversion of the potential ordinary shares.
 Options and warrants. In calculating diluted EPS, assume the exercise of outstanding dilutive
options and warrants. The assumed proceeds from exercise should be regarded as having been used
to repurchase ordinary shares at the average market price during the period. The difference between
the number of ordinary shares assumed issued on exercise and the number of ordinary shares
assumed repurchased shall be treated as an issue of ordinary shares for no consideration.
 Contingently issuable shares. Contingently issuable ordinary shares are treated as outstanding
and included in the calculation of both basic and diluted EPS if the conditions have been met. If the
conditions have not been met, the number of contingently issuable shares included in the diluted EPS
calculation is based on the number of shares that would be issuable if the end of the period were the
end of the contingency period. Restatement is not permitted if the conditions are not met when the
contingency period expires.
 Contracts that may be settled in ordinary shares or cash. Presume that the contract will be settled
in ordinary shares, and include the resulting potential ordinary shares in diluted EPS if the effect is
dilutive.
V. Retrospective Adjustments
a) The calculation of basic and diluted EPS for all periods presented is adjusted retrospectively when
the number of ordinary or potential ordinary shares outstanding increases as a result of a
capitalization, bonus issue, or share split, or decreases as a result of a reverse share split.
b) If such changes occur after the reporting date but before the financial statements are authorized for
issue, the per share calculations for those and any prior period financial statements presented are
based on the new number of shares.
Mobile : 0927 283 8234
Telephone : (043) 723 8412
VI. Rights Issue
a. The issue of ordinary shares at the time of exercise or conversion of potential ordinary shares does not
usually give rise to a bonus element. This is because the potential ordinary shares are usually issued for
full value, resulting in a proportionate change in the resources available to the entity.
b. In a rights issue, however, the exercise price is often less than the fair value of the shares. Therefore,
such a rights issue includes a bonus element. If a rights issue is offered to all existing shareholders, the
number of ordinary shares to be used in calculating basic and diluted earnings per share for all periods
before the rights issue is the number of ordinary shares outstanding before the issue, multiplied by the
following factor:
Fair value per share immediately before the exercise of rights

Theoretical ex-rights fair value per share
c. The theoretical ex-rights fair value per share is calculated by adding the aggregate market value of the
shares immediately before the exercise of the rights to the proceeds from the exercise of the rights and
dividing by the number of shares outstanding after the exercise of the rights. Where the rights are to be
publicly traded separately from the shares before the exercise date, fair value for the purposes of this
calculation is established at the close of the last day on which the shares are traded together with the
rights.
d. Calculation of theoretical ex-rights value per share is as follows:
Fair value of all outstanding shares before exercise

of rights + total amount received from exercise of rights
Number of shares outstanding before exercise +
number of shares issued in the exercise
Multiple Choice Problems
1. Equity balances of Bryant Company on December 31, 2022, follow:
12% Preference shares, 200,000 shares, par P100 20,000,000

Ordinary shares, 500,000 shares, par P50 25,000,000
Share premium 20,000,000
Retained earnings 10,000,000
The preference shares have a call price of 120, a liquidation price of 130. Dividends have not been paid for
3 years. What is the book value per preference share?
a. 142
b. 166
c. 132
d. 130
2 On December 31, 2022, Vladimir Company had 50,000 shares of P100 par value ordinary share capital
outstanding and 30,000 shares of P100 par value 10% noncumulative preference shares. The total
shareholders’ equity on December 31, 2022, amounted to P15,000,000. The preference shareholders have
a liquidation value of P130 per share and preference dividends have been paid up to December 31, 2022.
What is the book value per ordinary share on December 31, 2022?
a. 216
b. 200
c. 222
d. 240
Mobile : 0927 283 8234
Telephone : (043) 723 8412
3. Victor Company’s equity balances on December 31, 2022, are:
10% Cumulative preference shares, P100 par, 100,000 shares 10,000,000

Ordinary shares, P100 par value, 200,000 shares 20,000,000
Dividends in arrears on the preference shares are for 5 years. If the company were to be liquidated, the
preference shares would receive par plus a premium of P3,000,000. What is the book value per ordinary
share?
a. 150 c. 114
b. 135 d. 130
4. The equity balances of Zack Company on December 31, 2022, are:
Ordinary shares, P100 par, 400,000 shares 40,000,000

Subscribed ordinary shares, 50,000 shares 5,000,000
Subscription receivable 1,500,000
Treasury ordinary shares, 30,000 shares, at cost 4,500,000
The book value per share of ordinary shares is

a. 121.45 c. 116.67
b. 120.24 d. 120.11
5. During 2022, Thompson Company had the following two classes of shares issued and outstanding for the
entire year:
• 250,000 of ordinary shares, P100 par

• 100,000 of 12% cumulative preference shares, P100 par, convertible share for share into ordinary
shares
Thompson’s 2022 net income was P9,000,000. No dividends were declared or paid during the year. What
is the basic earnings per share?
a. 36.00 c. 40.00
b. 31.20 d. 32.60
6. Hill Company had the following capital during 2021 and 2022:
Preference shares, P100 par, 10% cumulative, 50,000 shares 5,000,000

Hill reported net income of P4,000,000 for the year ended December 31, 2022. Hill does not have any
dividends in arrears as of December 31, 2020. Hill paid no preference dividends during 2021 and paid
P800,000 in preference dividends during 2022. In its 2021 income statement, what amount should Hill report
as basic earnings per share?
a. 16,00
b. 25.00
c. 18.90
d. 17.50
10 | P a g e TSIY/RSORIANO/BVILLALUZ/JBINALUYO
Mobile : 0927 283 8234
Telephone : (043) 723 8412
7. The following data pertain to Gravity Company’s shares for 2021:
Ordinary shares, P50 par value

Shares outstanding 1/1 400,000
2-for-1 shares split, 4/1 400,000
Shares issued, 7/1 250,000
Shares reacquired as treasury, 11/1 120,000
Bonus issue 20% 12/1 186,000
Preference shares, P100 par value, 10% cumulative

Shares outstanding, 1/1 150,000
What is the number of shares for calculating earnings per share?

a. 1,086,000
b. 1,116,000
c. 1,100,000
d. 1,056,000
8. On January 1, 2022, Timothy Company had ordinary shares outstanding of P100 par value, 200,000 shares
or a total par of P20,000,000. On July 1, 2022, a bonus issue was made in the ratio of one additional ordinary
share for each original share. The net income for 2022 was P6,000,000. What is the basic earnings per share
in 2022?
a. 15
b. 30
c. 20
d. 10
9. On January 1, 2022, Jomari Company had 300,000 ordinary shares outstanding, P100 par, or a total par
value of P30,000,000. During 2022, Jomari issued rights to acquire one ordinary share at P100 in the ratio
of one share for every 5 shares held. The rights are exercised on April 1, 2022. The market value of each
ordinary share immediately prior to March 31, 2022, was P160. The net income for 2022 was P6,000,000.
How much is the basic earnings per share in 2022?
a. 17.14
b. 16.67
c. 18.75
d. 17.39
10. Linda Company provides the following data for the entire year:
Net income 8,000,000

Employee shares options outstanding during

the entire year:
Option shares 40,000

Exercise price 200
Average market price 250
Ending market price 400
What is the diluted earnings per share?

a. 20.00 c. 18.18
b. 19.61 d. 22.22
Mobile : 0927 283 8234
Telephone : (043) 723 8412
11. Mike Company’s capital structure was as follows:

2021 2022
Outstanding shares of shares:
Ordinary shares 500,000 500,000

Convertible preference shares 100,000 100,000
During 2022, Mike paid dividends of P5 per share on its preference shares. The preference shares are
convertible into 200,000 shares of ordinary. Net income for 2022 was P5,000,000. What is the diluted
earnings per share for 2022?
a. 9.00 c. 8.33
b. 7.14 d. 6.43
12. Marcy Company has 100,000 ordinary shares issued and outstanding in 2022. Marcy also had 30,000 written
put options during 2022, with an exercise price of P400. The holders of the written options can exercise their
equity instruments at any time during the year until December 31, 2023. If the average market price in 2022
is P300, how much will be the diluted earnings per share if Marcy reported a net income of P3,000,000?
a. 30.00 c. 27.27
b. 28.22 d. 26.15
14. The income statement of Archie Company shows a net loss of P7,000,000 for the year ended December
31, 2022. The company has shares outstanding as follows:

Preference shares, P100 par, 10% cumulative, 50,000 shares
convertible into 200,000 shares of ordinary shares 10,000,000
What is the basic loss per share?

a. 40
b. 35
c. 20
d. 17.50
15. Information relating to the capital structure of Marriot Company on December 31, 2021 and 2022, is as
follows:
Ordinary shares 110,000 shares

Convertible preference shares 20,000 shares
10% Convertible bonds (issued in 2020) P1,200,000
Share options 20,000
The share options have an exercise price of P15. Market price of Marriot shares was P22 on December 31,
2022, and averaged P20 during the year. No value was assigned to the share options.
Marriot Company paid dividends of P5 per share on its preference shares. The preference shares is
convertible into 40,000 shares of ordinary shares. The 10% convertible bonds are convertible into a total of
18,000 shares of ordinary shares. The net income for the year ended December 31, 2022, is P650,000.
Assume that the income tax rate is 30%. What is the 2022 diluted earnings per share?
a. 5.00
b. 4.78
c. 4.19
d. 4.24
END

FAR04-13.2 - SBPT BVPS EPS - Revised

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FAR04-13.2 - SBPT BVPS EPS - Revised

Uploaded by

Copyright:

Available Formats

No. 125 Brgy.

SHARE BASED COMPENSATION

I. Key Terms and Definitions:

a) Cash-settled share-based payment transaction - A share-based payment transaction in which

b) Equity-settled share-based payment transaction - The entity receives goods or services as

e) Vest - To become an entitlement or exercisable. Under a share-based payment arrangement, a

II. Measurement of Compensation for Share Options

III. Share Appreciation Rights

MULTIPLE CHOICE PROBLEMS

Jan. 1, 2020 100

What is the amount of compensation expense to recognized by Brenda for 2022?

December 31, 2020 112 per share

* Share alternative – equal to 20,000 shares with a par value of P30.

4. What is the share premium if employees choose the share alternative?

BOOK VALUE PER SHARE

Par value of preference shares xx

Total shareholders’ equity xx

EARNINGS PER SHARE

Also known as a common share or common stock. An equity instrument that

Reduction in earnings per share or an increase in loss per share resulting

II. Requirement to Present EPS

III. Basic EPS

IV. Diluted EPS

b. Guidance on Calculating Dilution

VI. Rights Issue

Fair value per share immediately before the exercise of rights

d. Calculation of theoretical ex-rights value per share is as follows:

Fair value of all outstanding shares before exercise

Multiple Choice Problems

1. Equity balances of Bryant Company on December 31, 2022, follow:

12% Preference shares, 200,000 shares, par P100 20,000,000

3. Victor Company’s equity balances on December 31, 2022, are:

10% Cumulative preference shares, P100 par, 100,000 shares 10,000,000

4. The equity balances of Zack Company on December 31, 2022, are:

Ordinary shares, P100 par, 400,000 shares 40,000,000

The book value per share of ordinary shares is

• 250,000 of ordinary shares, P100 par

Preference shares, P100 par, 10% cumulative, 50,000 shares 5,000,000

7. The following data pertain to Gravity Company’s shares for 2021:

Ordinary shares, P50 par value

Preference shares, P100 par value, 10% cumulative

What is the number of shares for calculating earnings per share?

Net income 8,000,000

Employee shares options outstanding during

Option shares 40,000

What is the diluted earnings per share?

11. Mike Company’s capital structure was as follows:

Ordinary shares 500,000 500,000

Ordinary shares, P100 par, 200,000 shares 20,000,000

What is the basic loss per share?

Ordinary shares 110,000 shares

You might also like