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Question 10. Issus Inc. has 100,000 shares in issue on 1 January 20X0. On 31 March 20X0 it issues $200,000 of 5%
convertible debt. The terms of conversion allow the debt holders to convert each $100 of debt into 10 shares on 30
September 20X2 or to convert each $100 of debt into 12 shares on 30 September 20X4.
The profit after tax for the year ended 31 December 20X0 is $300,000.
The rate of tax is 30%.
What is the diluted earnings per share (eps) for the year ended 31 December 20X0 in accordance withIAS 33 Earnings
Per Share’.Hi,
If you attempt the question first then I can look to help you with what you do not understand. Here the challenge is dealing with the convertible, so remember to look at the post-tax interest saved on the convertible once converted and then also look at the maximum number of shares to be issued. have a go and see how you get on. I’ll gladly help then.
Thanks
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