On December 31, 2010, Berclair, Inc. had 200 million shares of common stock and

Question

On December 31, 2010, Berclair, Inc. had 200 million shares of common stock and 4 million shares of 10%, $100 par value cumulative preferred stock issued and outstanding. Berclair issued a 6% common stock dividend on July 1, 2011. On March 1, 2011, Berclair purchased 24 million shares of its common stock as treasury stock. 4 million treasury shares were sold on October 1. Net income for the year ended December 31, 2011, was $160 million.

Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2006. The options are exercisable as of September 13, 2010, for 30 million common shares at an exercise price of $56 per share. During 2011, the market price of the common shares averaged $70 per share.

The options were exercised on September 1, 2011.

Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2011

Explanation / Answer

basic earning per share = total earning/no of shares = 160 million/(24-4)million = $8 per share diluted earning per share = 30 million*(70-56)/30 million = $14 per share

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.