Exercises Financial Accounting - Dilutive Securities & EPS

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  • SOAL ASISTENSI AKUNTANSI KEUANGAN 2

    DILUTIVE SECURITIES & EPS

    Dosen: Ibu Dini Marina | Asdos: Fabiola Kristi | Pertemuan 3 | Page 1

    UNIVERSITAS INDONESIA

    FAKULTAS EKONOMI DEPARTEMEN AKUNTANSI

    PROBLEM 1

    Convertible Bonds

    On January 1 20x1, Afika Company issued 12% convertible bond at par, with face value of

    Rp 10,000,000 maturing on January 1 20x6. The bond is convertible into one ordinary share for

    each Rp 10,000 bond (par value of the ordinary share is Rp 1,000) Interest is payable

    semiannually. At January 1 20x2, Afika could have issued non-convertible debt with a 5 year term

    bearing an interest rate 15%.

    1. Prepare the journal entry to record the issuance of the convertible bond on January 1 20x1.

    2. Prepare the journal entry if the convertible bond is

    a) Converted at Maturity Date

    b) Converted at January 1 20x2

    c) Repurchased at January 1 20x2 for Rp 11,500,000. At the date of repurchase Afika could

    have issued non-convertible bond at Rp 10,750,000

    Convertible Preference Shares

    Afika issued 1,000 shares of Rp 5,000 par value preference shares at market value Rp 7,500

    per share. Each preference shares is convertible into 4 ordinary shares (par value of ordinary share

    is Rp 1,000) The market price of ordinary share is Rp 2,500. Record the issuance and conversion

    of preference shares! What if the preference shares are repurchased?

    Share Warrants

    Afika has decided to raise additional capital by issuing Rp 12,000,000 face value bonds with 5

    year maturity at a coupon rate 10%. Interest is payable annually. The share warrants should be

    issued at the rate of one warrant for each Rp 100,000 bond. One detachable warrant can be used to

    buy 5 ordinary shares at Rp 2,000 (Rp 1,000 par) The market rate for equivalent bonds without

    share warrant is 12%. The cash receipt from the issuance is Rp 12,250,000

    1. What entry should be made at the time of the issuance of the bonds plus share warrants?

    2. Record journal entry if half of the warrants are excercised. The market price of ordinary share

    is Rp 2,200

    Share Option Plans

    On September 30, 20x1, Afika decide to use share option plan that granted option to

    executives to purchase 5,000 shares of companys Rp 1,000 par value. The options were granted

    at January 4 20x2 and were vested 3 years after the grant date (If the grantee is still employed)

    The options expired 5 years from grant date. The option price was Rp 1,500 and the fair value

    option pricing model determines the total compensation expense to be Rp 15,000,000

  • SOAL ASISTENSI AKUNTANSI KEUANGAN 2

    DILUTIVE SECURITIES & EPS

    Dosen: Ibu Dini Marina | Asdos: Fabiola Kristi | Pertemuan 3 | Page 2

    UNIVERSITAS INDONESIA

    FAKULTAS EKONOMI DEPARTEMEN AKUNTANSI

    of the options were excercised during 20x6 ;2,000 on February 29 when the market price is

    Rp 2,150 and 1,750 on August 31 when the market price is Rp 2,450. Prepare the journal entries

    relating to the share option plans for 20x2, 20x3, 20x4, and 20x6!

    Restricted Share

    Afika issues 3,000 restricted shares for her CFO on June 31 20x2. The shares have a fair value

    Rp 2,200. The service and vesting period relates to these restricted shares is 3 years. The par value

    is Rp 1,000. Prepare the journal entries to recordthe restricted shares on June 31, and December

    31 20x2. Prepare the journal entry if the CFO is resigned at January 20x3!

    Weighted Average Shares Outstanding

    Below is the summary of Afika ordinary share activities :

    Dates Share Changes Share Outstanding

    January 1 Beginning Blance 30,000

    February 29 Issued 20,000 shares 20,000

    May 1 Purchased 5,000 treasury shares (5,000)

    July 31 Issued 10,000 shares 10,000

    October 1 2-for-1 share split 55,000

    December 31 Ending Balance 110,000

    Compute the weighted average shares outstanding!

    Earnings Per Share

    Using the weighted average shares outstanding above, compute the basic and diluted EPS

    using following information

    1. 6% Convertible bond at par, with face value of Rp 10,000,000. The fair value of liability

    component at year end is Rp 9,600,000. The convertible bond can be converted to 10,000

    Shares in total. Market rate of equivalent non-convertible bond is 10%

    2. 8%, Rp 5,000,000 preference shares convertible to 2,000 shares

    3. 30,000 warrants are outstanding. 2 of warrants could be excercised to purchase one ordinary

    share for Rp 1,500.

    4. Afikas net income is Rp 15,000,000. Market price at year end is Rp 2,100 and tax rate 25%.

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