SOLVED

15.2Â Â Learning Objective 2 1) Which statement is correct about basic EPS? A) It is an indicator of profitability that communicates ownership of earnings attributable to a company’s dilutive shares. B) It is an indicator of profitability that communicates ownership of earnings attributable to a company’s ordinary shares. C) It indicates the market price attributable to a company’s ordinary shares. D) It indicates the market price attributable to a company’s dilutive shares. 2) Which statement is correct about basic EPS? A) It indicates the net income before tax attributable to a company’s ordinary shares. B) It indicates the net income before tax attributable to a company’s preferred shares. C) It indicates the net income attributable to a company’s preferred shares. D) It indicates the net income attributable to a company’s ordinary shares. 3) Which statement is correct about basic EPS? A) It is calculated on the shares outstanding at the beginning of the year. B) It is calculated on the shares outstanding at the end of the year. C) It is calculated on the shares issued during the year. D) It is calculated on the shares outstanding during the year. 4) What is the meaning of “net income attributable to ordinary shareholders”? A) It means net income plus dividends on common and preferred shares. B) It means net income less dividends on preferred shares. C) It means net income plus dividends on common shares. D) It means net income less dividends on common and preferred shares. 5) What is the meaning of “net income attributable to ordinary shareholders”? A) This is not used in the EPS calculation. B) This refers to the numerator of the EPS calculation. C) This refers to the denominator of the EPS calculation. D) This is the not used in the diluted EPS calculation. 6) Which statement is correct about the “net income attributable to ordinary shareholders”? A) Other comprehensive income (OCI) is included in this calculation. B) Other comprehensive income (OCI) is excluded from this calculation. C) Dividends to preferred shareholders are added to the net income. D) Dividends to common shareholders are added to the net income 7) Use the following information to calculate the “net income available to ordinary shareholders”: Net income 1,000,000 Dividends on cumulative preferred shares 40,000 Dividends on non-cumulative preferred shares 100,000 Dividends declared in 2014: – Common shares – Cumulative preferred shares – Non-cumulative preferred shares 50,000 80,000 100,000 Dividends paid in 2014: – Common shares – Cumulative preferred shares – Non-cumulative preferred shares 30,000 50,000 0 A) $820,000 B) $860,000 C) $950,000 D) $960,000 8) Which statement is correct about the “weighted average number of ordinary shares outstanding” (WASO)? A) It is used only in the numerator of the EPS calculation. B) The weighted average is the number of shares outstanding at the beginning of the year. C) The weighted average accounts for changes in shares issued or cancelled during the year. D) It is used only in the denominator of the diluted EPS calculation. 9) Use the following information to calculate the “weighted average number of ordinary shares outstanding” (WASO)? Ordinary shares, January 1, 2015 120,000 Shares issued, March 1, 2015 60,000 Shares repurchased, June 1, 2015 30,000 Dividends paid on ordinary shares, Nov 1, 2015 90,000 A) 112,500 B) 152,500 C) 157,500 D) 170,000 10) Which statement is correct about “weighted average number of ordinary shares outstanding”? A) Treasury shares that are cancelled are adjusted in this calculation. B) Treasury shares that are not cancelled are adjusted in this calculation. C) Treasury shares that are repurchased are adjusted in this calculation. D) Treasury shares are ignored for purposes of this calculation.