Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of

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Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday’s income for 2014 was $110,000 or more, 10,000 additional shares would be issued to Holiday’s stockholders in 2015. Holiday’s income for 2013 was $120,000.

Instructions
(a) Would the contingent shares have to be considered in Winsor’s 2013 earnings per share computations?
(b) Assume the same facts, except that the 10,000 shares are contingent on Holiday’s achieving a net income of $130,000 in 2014. Would the contingent shares have to be considered in Winsor’s earnings per share computations for 2013?

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Intermediate Accounting

ISBN: 978-1118147290

15th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield

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