On December 31, 2015, Berclair Inc. had 460 million shares of common stock and 4
ID: 2497154 • Letter: O
Question
On December 31, 2015, Berclair Inc. had 460 million shares of common stock and 4 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2016, Berclair purchased 128 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2016. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2016, was $800 million.
Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2011. The options were exercisable as of September 13, 2015, for 30 million common shares at an exercise price of $56 per share. During 2016, the market price of the common shares averaged $70 per share.
Compute Berclair's basic and diluted earnings per share for the year ended December 31, 2016. (This is all of the information given for this problem)
On December 31, 2015, Berclair Inc. had 460 million shares of common stock and 4 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2016, Berclair purchased 128 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2016. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2016, was $800 million.
Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2011. The options were exercisable as of September 13, 2015, for 30 million common shares at an exercise price of $56 per share. During 2016, the market price of the common shares averaged $70 per share.
Explanation / Answer
Workings
Ans 1 Net Income 8000,00,000.00 Less Preference Dividend 360,00,000.00 Net income avialble to common stock holders 7640,00,000.00 Basic EPS=Net Income to common stock/Weighted average no of shares 2.06 Ans 2 Adjustment for eighted average no of Common stock for Diluted EPS No Of shares 300,00,000.00 Diliution=(Market Price-Expercise Price)/Market Price 60,00,000.00 Adjusted Weighted average number of common stock 3762,98,630.14 Net income avialble to common stock holders 7640,00,000.00 Diluited EPS=Net Income to common stock/Weighted average no of shares 2.03Workings
Date Event No Of Shares Outstanding After the change No Of Days OS Weighted Average no of shares Dec 31, 2015 Opening no of common stock 4600,00,000.00 4600,00,000.00 59 743,56,164.38 Mar 1, 2016 Purchase of Treasury Stock -1280,00,000.00 3320,00,000.00 Jul 1, 2016 Issue of stock dividend(Considered OS from the beginning) 166,00,000.00 59 26,83,287.67 Jul 1, 2016 No of common stock OS after Stock Dividend 3486,00,000.00 214 2043,84,657.53 Oct 1, 2016 Re-issue of treasury sahres 40,00,000.00 3526,00,000.00 92 888,74,520.55 3702,98,630.14 Weighted Average no of common stock 3702,98,630.14Related Questions
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