With convertible bonds outstanding you have a complex capital structure and you have to provide primary and fully-diluted earnings per share. In addition EPS should be presented in detail showing the breakdown of the extraordinary items. Fully diluted EPS is based on the assumption that the bonds have been converted and more common shares are outstanding. But if fully diluted EPS is the same or higher than primary, you do not report it because it is anti-dilutive.

24500

At December 31, 2011, the books of Yorke Corporation include the following balances:

Long-term liabilities:

Bonds payable, 8%, each $1,000 bond is convertible into 50 shares of common stock; bonds sold at par and were issued

November 3, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . $ 500,000

Stockholders’ equity:

Preferred stock, 7%, $50 par, cumulative, nonconvertible,

10,000 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 500,000

Paid-in capital in excess of par, preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000

Common stock, $10 par, authorized 300,000 shares;

199,500 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,995,000

Paid-in capital in excess of par, common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519,000