Additional information 1. The common and preferred shares and the convertible bonds were outstanding from...
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Additional information 1. The common and preferred shares and the convertible bonds were outstanding from the beginning of the year. 2. In 2020 , a $1,500,000 dividend was declared and distributed; however, no dividends were declared in 2019. 3. The average market price of the common shares in 2020 was $0. The stock price was $27 on January 1,2020, and $5 on December 31,2020. 4. The convertible bonds were sold at par. 5. The income tax rate for 2020 is 40%. A public company has asked for your help. They are having a hard time dealing with earnings per share and would like your consultation. They are planning on issuing a few securities in the coming year and would like your help. Please discuss how these two issues will impact the diluted earnings per share calculation. 1) Convertible debt where a required conversion will take place ten years after the issue date 2) Debt with detachable warrants. The warrants may be exercised if profits exceed a certain threshold in the next five years ($1,000,000 is the threshold)
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