Deloitte. IFRS Bookmarks: VIEW ADD QuickFind: GO Keyword Message Centre Question

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Deloitte. IFRS Bookmarks: VIEW ADD QuickFind: GO Keyword Message Centre Question3 Cedars S.A. has two convertible debt instruments, as shown in the graphic. Profits for ordinary shareholders are 1,245,000, and there are 1,000,000 1 ordinary shares. Tax rate is 32%. what are Cedarsthe diluted earnings per share? Select one option and click Submit. O 0.78 Tools Background Coach 1. €2,000,000 6% bonds convertible into 500,000 shares Examples Reference €0.90 ed.91 O 0.93 2. € 1,400,000 9% loan convertible into 70,000 shares Clue Calculator Word SUBMIT Excel EXIT HELP PRINT ACTION PLANNER 4/12

Explanation / Answer

$ Profit for ordinary shareholders befor tax ( $ 1,245,000/68% )                    18,30,882 Add: Bond interest ( $ 2,000,000 x 6% )                       1,20,000 Add: Interest on loan ( $ 1,400,000 x 9% )                       1,26,000 Profit for ordinary shareholders after conversion                    20,76,882 Less: Income tax at 32%                    (6,64,602) Profit after tax                    14,12,280 Number of shares ( 1,000,000 + 500,000 + 70,000) = 1,570,000 Diluted EPS = $ 1,013,880 / 1,570,000 = $ 0.90 per share

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