(jondyear Tire and Rubber ('ompany reports the following basic and diluted earnings per share information in its 2007 10-K report.

(a) Describe the accounting definitions for basic and diluted earnings per share.

(b) Identify the Goodyear numbers that make up both EPS computations.

(c) Why does Goodyear add back \(\$ 13\) million for interest expense on the convertible debt securities in the diluted EPS calculation?

Transcribed Image Text:

Year Ended December 31 (in millions, except per share amounts) 2007 Net Income (Loss) $602 Net Income (Loss) Per Share-Basic Income (Loss) from Continuing Operations $0.70 Discontinued Operations... 2.30 Income (Loss) before Cumulative Effect of Accounting Change Cumulative Effect of Accounting Change... 3.00 - Net Income (Loss) Per Share-Basic $3.00 Weighted Average Shares Outstanding (Note 4) 201 Net Income (Loss) Per Share-Diluted Income (Loss) from Continuing Operations. $0.65 Discontinued Operations.... 2.00 Income (Loss) before Cumulative Effect of Accounting Change 2.65 Cumulative Effect of Accounting Change.... Net Income (Loss) Per Share-Diluted $2.65 Weighted Average Shares Outstanding (Note 4). 232 Note 4: Per Share of Common Stock Income (Loss) from Continuing Operations.... $139 After-tax impact of 4% Convertible Senior Notes due 2034 13 Adjusted Income (Loss) from Continuing Operations 152 Discontinued Operations.... 463 Cumulative Effect of Accounting Change Adjusted Net Income (Loss)..... Weighted average shares outstanding Weighted average shares outstanding-basic. 4% convertible senior notes due 2034.... Stock options and other dilutive securities.. Weighted average shares outstanding-diluted.. $615 200,933,767 26,673,721 4,110,442 231,717,930