Book value Per Share

It is the amount which the preference shareholders would receive upon liquidation of the entity.

A. Liquidation value
B. Par value
C. Book value.
D. Fair value

Nike Company Paid cash dividends of P600 000 and reported net income of P 1 550 000. The ordinary
shareholder’s equity at year end was P5 000 000 and the entity had 200 000 ordinary shares
outstanding. What is the book value per ordinary Share?

A. 25
B. 22
C. 3
D. 7.75

Answer: A

Book Value Per Ordinary Share ( 5 000 000/200 000 shares) 25

Basic Earnings Per Share

Earnings per share should always be reported for

A. Gross Profit
B. Income Before Tax
C. Income from continuing Operations
D. Prior Period Error

Canyon Company reported in the financial statements for the year end December 31, 2015 basic
earnings per share of P85. On July 1, 2016, the entity made a 3 for 1 bonus issue. What amount of
earnings per share for 2015 should be reported as comparative information in the financial statements
for 2016?

A. 21.25
B. 37.50
C. 34.00
D. 28.30

Answer: A
Basic Earnings per share- 2015 (85/4) 21.25

The bonus issue is the equivalent of a stock Dividend

Diluted Earnings Per Share

In computing Diluted Earnings Per Share, interest expense on convertible bond payable should be

A. Added back to net income at gross

B. Added back to net income net of tax
C. Deducted from net income net of tax
D. Ignored

Glenda Company had 200 000 ordinary shares issued and outstanding on January 01, 2015. On July 01,
2015, the entity issued a 10% stock dividend.Unexercised stock options to purchase 40 000 ordinary
shares adjusted for the 2015 stock dividend at P20 per share were outstanding at the beginning and end
of 2015. The market price of ordinary share which was not affected by the stock dividend was P25
during 2015. Net income for the year was P1 100 000. What amount should be reported as diluted
earnings per share?

A. 4.23
B. 4.82
C. 5.00
D. 5.05

Answer: B

January 1 200 000x1.10x12/12 220 000

1 Option Shares 40 000

1 Assumed treasury shares (800 000/2500 (32 000)

Average number shares 228 000

Diluted Earnings per share (1 100 000/228 000) 4.82