Question: Fremantle Brewing Inc. recently purchased Perth Corp. One of the terms of the merger was that if Perths income for 2015 was $500,000 or more,

Fremantle Brewing Inc. recently purchased Perth Corp. One of the terms of the merger was that if Perth’s income for 2015 was $500,000 or more, 100,000 additional shares would be issued to Perth’s stockholders in 2016. Perth’s income for 2014 was $480,000.

Instructions
(a) Would the contingent shares have to be considered in Fremantle’s 2014 earnings per share computations?
(b) Assume the same facts, except that Perth’s income for 2014 was $510,000. Would the contingent shares have to be considered in Fremantle’s earnings per share computations for 2014?

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