Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2021 and 2022....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2021 and 2022. As part of its executive compensation plan, at January 1, 2020, the company had issued 30 million executive stock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but not prior to January 1, 2023. The fair value of the options was estimated on the grant date to be $3 per option. In 2021, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 15 million restricted common shares to senior executives at January 1, 2021. The shares vest four years later. The fair value of the stock was $12 per share on the grant date. The average price of the common shares was $12 and $15 during 2021 and 2022, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $150 million and $160 million in 2021 and 2022, respectively. Required: 1. Compute basic and diluted earnings per share for Witter House in 2021. 2. Compute basic and diluted earnings per share for Witter House in 2022. (For all requirements, do not round intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answers to 2 decimal places.) Answer is complete but not entirely correct. Numerator 1. Basic $ 150 Diluted $ 150 Denominator Earnings per share 300 $ 0.50 300.00 > = $ 0.50 2. Basic $ 160 300 = $ 0.53 Diluted $ 160 320 = $ 0.50 Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2021 and 2022. As part of its executive compensation plan, at January 1, 2020, the company had issued 30 million executive stock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but not prior to January 1, 2023. The fair value of the options was estimated on the grant date to be $3 per option. In 2021, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 15 million restricted common shares to senior executives at January 1, 2021. The shares vest four years later. The fair value of the stock was $12 per share on the grant date. The average price of the common shares was $12 and $15 during 2021 and 2022, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $150 million and $160 million in 2021 and 2022, respectively. Required: 1. Compute basic and diluted earnings per share for Witter House in 2021. 2. Compute basic and diluted earnings per share for Witter House in 2022. (For all requirements, do not round intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answers to 2 decimal places.) Answer is complete but not entirely correct. Numerator 1. Basic $ 150 Diluted $ 150 Denominator Earnings per share 300 $ 0.50 300.00 > = $ 0.50 2. Basic $ 160 300 = $ 0.53 Diluted $ 160 320 = $ 0.50
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Has Mississippi enacted the Uniform Real Property Electronic Recording Act? Provide the URL/web address of your source. Provide the citation to where this law is found in the Miss. Code (including...
-
The following graphic indicates where each part of the dollar that a student pays for a new college textbook goes: Where the New Textbook Dollar Goes*... Students are frustrated with the cost of...
-
A small manufacturing firm believes there is a market for handheld tools that are carefully crafted for local markets. After spending two months in Europe, the president of this firm believes that...
-
How is the present value index for a proposal determined?
-
Use Solver to create a Sensitivity Report for question 18 at the end of Chapter 3 and answer the following questions: a. Which of the constraints in the problem are binding? b. If the company was...
-
There is a directive veto files that can restrict the kind of files to share. Explain it with an example
-
Explain the differences and similarities of information content theory in determining capital structure and determining dividend policy. What are the implications of each of these theories in...
-
5. LGI projects the following after-tax cash flows from operations from its aging Bowie, Maryland plant (which first went on line in 1953) over the next five years. What is the PV of these cash...
-
The dynamic system shown below consists of a cart of mass M carrying a simple pendulum L. The cart moves vertically. It is constrained by a spring k and damper c, and is subject to an external force...
-
You have the following information on Ralph's Company (1) The firm's bonds have a maturity of 20 years, an 8.00% annual coupon, a par value of $1,000, and a market price of $1,075.00.(2) The...
-
"Imagine you are an auditor tasked with reviewing the financial statements of a company. During your audit, you identify a significant matter that requires emphasis to ensure stakeholders are...
-
A company is attempting to immunize a schedule of liability cash flows via cash flow matching. The cash flows are as follows: Year Liability (000s) 1 126 2 272 3 372 Starting from the end and working...
-
12- Suppose I want to be able to withdraw $5,000 at the end of five years and withdraw $6,000 at the end of six years, leaving a zero balance in the account after the last withdrawal. If I can earn...
-
Frontland Advertising creates, plans, and handles advertising campaigns in a three-state area. Recently, Frontland had to replace an inexperienced office worker in charge of bookkeeping because of...
-
What are progressive and regressive taxes?
-
What is a flat tax?
-
What is the ability-to-pay principle?
Study smarter with the SolutionInn App