Final answer:
To calculate Skysong Inc.'s earnings per share (EPS), we need to determine both basic and diluted EPS. Basic EPS is the after-tax net income divided by the weighted number of shares outstanding, while diluted EPS considers the potential conversion of convertible bonds. The exact EPS figures cannot be calculated without further information regarding the number of weighted shares.
Step-by-step explanation:
To determine the earnings per share (EPS) figures for Skysong Inc. for the fiscal year ending December 31, 2025, we need to calculate both basic EPS and diluted EPS. For the basic EPS, we would solely use the actual number of shares outstanding during the year. Since there were 870,000 shares initially, and an additional 543,000 shares were issued on April 1, 2025, the weighted average number of shares to be used for the calculation would account for these newly issued shares being outstanding for nine months of the year (i.e., from April to December).
Basic EPS is calculated using the formula: Basic EPS = Net Income / Weighted Average Number of Shares Outstanding. However, the exact number is not provided here without more information. For diluted EPS, potential conversions that could occur must be included, such as those resulting from convertible bonds. As none of the convertible bonds were actually converted, we use the 'if-converted' method to find out the potential dilution. The formula for diluted EPS would be: Diluted EPS = (Net Income + Convertible Bond Interest (1 - Tax Rate)) / (Weighted Average Number of Shares Outstanding + Shares from Conversion of Bonds).
For the earnings figures of Skysong Inc., the basic earnings figure is the after-tax net income which is given as $1,613,000. For diluted earnings, you would add the after-tax value of the convertible bond interest back to the net income since the interest would not have been paid had the bonds been converted to shares.