During 2016, Oddie Corp

question 23

Multiple Choice

During 2016, Oddie Corp. had net income of $300,000. Included in net income was after-tax interest expense of $20,000 on convertible bonds. The $200,000 face value of convertible bonds can be converted into common stock at the rate of 200 shares per $1,000 bond. Prior to the conversion, there were 400,000 shares of common stock outstanding. What is the amount of fully diluted earnings per share?

• A) $0.636
• B) $0.727
• C) $0.750
• D) not determinable because the bonds are not dilutive

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that serve as a global framework for the preparation of public company financial statements.

Premium Account

An upgraded account or service that a customer opts for, typically providing additional features or benefits for an extra cost.

Discount Account

An account that represents the difference between a bond's face value and its selling price when it is sold at less than its face value.

Debt to Assets Ratio

A financial ratio that measures the percentage of a company's assets financed by creditors through debt, indicating the degree of financial leverage.