Exam 18: Earnings Per Share

The income statement of Faster Computers,Inc.showed the following information on December 31,2014. Compute earnings per share figures for common stock under the assumption that Faster Computer Inc.has Note: Assumption (1)is independent of (2).

Binary Controls Inc.had 250,000 shares of common stock outstanding at the end of 2012.During 2013 and 2014,the following transactions took place. Binary Controls Inc.has a simple capital structure. Compute the weighted average number of shares for 2013 and 2014 to be used in the earnings per share computation for comparative financial statements at the end of 2014.

Which combination is the correct statement regarding disclosure requirements for earnings per share?

Leshner Corporation began business on January 1,2014.Due to difficulties in beginning operations,the company issued 50 shares of common stock (par $10)on January 1,2014,to the organizers.Twenty additional shares were also sold on that date.The following also occurred during the year 2014: The weighted average number of shares outstanding for 2014 was

The following information applies to the next three questions: Tangier Corporation currently has stock rights outstanding for 2,000 common shares.The exercise price of these shares is $25.The options were issued in January of 2012.The average market price of the related common stock during the year 2012 was $30.The average market price of the related common stock during 2013 was $26 and during 2014 was $21.The company's fiscal year ends on December 31 of each year. -How should these stock rights be treated in the earnings per share calculation for the year ending December 31,2013?

Which of the following is correct regarding earnings per share (EPS)?

On December 31,2013,Overachiever,Inc.had 500,000 shares of common stock issued and outstanding.Overachiever issued a 10 percent stock dividend on June 1,2014.On November 1,2014,Overachiever reacquired 30,000 shares of its common stock and recorded the purchase using the cost method of accounting for treasury stock.What number of shares should be used in computing basic earnings per share for the year ended December 31,2014?

Bowie Company had 100 shares of common stock issued and outstanding at December 31,2013.On July 1,2014,Bowie issued a 10 percent stock dividend.Unexercised stock options to purchase 20 shares of common stock (adjusted for the 2014 stock dividend)at $20 per share were outstanding at the beginning and end of 2014.The average market price of Bowie's common stock (which was not affected by the stock dividend)was $25 per share during 2014.The ending market price was $40.Net income for the year ended December 31,2014,was $2,200.What was Bowie's 2014 diluted earnings per share,rounded to the nearest cent?

Warrants exercisable at $15 each to obtain 25,000 shares of common stock were outstanding during a period when the average and year-end market price of the common stock was $30.Application of the treasury stock method for the assumed exercise of these warrants in computing diluted earnings per share will increase the weighted-average number of outstanding common shares by

Which of the following is correct regarding the effect that dilutive convertible bonds have on the earnings per share computation?

At December 31,2013,Morrison Company had 700 shares of common stock outstanding.On September 1,2014,an additional 300 shares of common stock were issued.In addition,Morrison had $20,000 of 8 percent convertible bonds outstanding at December 31,2013,which are convertible into 400 shares of common stock.No bonds were converted into common stock in 2014.Net income for the year ended December 31,2014,was $6,000.Assuming an income tax rate of 50 percent what would be the company's diluted earnings per share for the year ended December 31,2014?

For a company having several different issues of convertible securities and/or stock options and warrants,the FASB requires selection of the combination of securities producing

For purposes of computing the weighted-average number of shares outstanding during the year,a midyear event that must be treated as occurring at the beginning of the year is the

What would be the effect on book value per share and earnings per share if a corporation purchased its own shares in the open market at a price greater than the book value per share?

At December 31,2013,the Agricole Company had 600,000 shares of common stock outstanding.On September 1,2014,an additional 400,000 shares of common stock were issued.In addition,Agricole had $20,000,000 of 8 percent convertible bonds outstanding at December 31,2013,which are convertible into 400,000 shares of common stock.No bonds were converted into common stock in 2014.The net income for the year ended December 31,2014,was $7,000,000.Assuming the income tax rate was 40 percent,what should be the diluted earnings per share for the year ended December 31,2014?

When computing dilutive EPS,the treasury stock method can be used for all of the following except

Digistore,Inc. ,had 400,000 shares of $20 par common stock and 40,000 shares of $100 par,6% cumulative,convertible preferred stock outstanding for the entire year ended December 31,2014.Each share of the preferred stock is convertible into 5 shares of common stock.Digistore's net income for 2014 was $1,680,000.For the year ended December 31,2014,the diluted earnings per share is

An entity that reports a discontinued operation or an extraordinary item shall present basic and diluted earnings per share amounts for those line items

Of the following,select the incorrect statement concerning earnings per share.

The following information relates to the capital structure of Quantico Corp.: During 2014 Quantico paid $90,000 in dividends on the preferred stock.Quantico's net income for 2014 was $1,960,000 and the income tax rate was 40 percent.For the year ended December 31,2014,the diluted earnings per share is