Amy Dyken, controller at Fitzgerald Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Fitzgerald’s financial statements. Selected financial information for the fiscal year ended June 30, 2022, is shown below.
The following transactions have also occurred at Fitzgerald.
1. Options were granted on July 1, 2021, to purchase 200,000 shares at €15 per share. Although no options were exercised during fiscal year 2022, the average price per ordinary share during fiscal year 2022 was €20 per share.
2. Each bond was issued at face value. The convertible bonds will convert into ordinary shares at 50 shares per €1,000 bond. The conversion is exercisable after 5 years, and the bonds were issued in 2020. The interest on the liability component of the convertible bonds payable for the fiscal year ending June 30, 2022, was €450,000. 3. The preference shares were issued in 2020.
4. There are no preference dividends in arrears; however, preference dividends were not declared in fiscal year 2022.
5. The 1,000,000 ordinary shares were outstanding for the entire 2022 fiscal year.
6. Net income for fiscal year 2022 was €1,500,000, and the average income tax rate is 40%.
Instructions
For the fiscal year ended June 30, 2022, calculate the following for Fitzgerald Pharmaceutical Industries.
a. Basic earnings per share.
b. Diluted earnings per share.
