Professional Simulation In this simulation, you are asked to address questions related to the accounting for share options and earnings per share computations. Prepare responses to all parts.

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KWW Professional Simulation Share Options and EPS Time Remaining 3 hours 50 minutes As auditor for Banquo & Associates, you have been assigned to check Duncan Corporation's computation of earnings per share for the current year. The controller, Mac Beth, has suppiled you with the following computations. Net Income Ordinary shares issued and outstanding: Beginning of year End of year Average Eamings per share: R$3,374,960 1,285,000 1,200,000 1,242,500 R$3,374,960 - R$2.72 per share 1,242,500 You have developed the following additional Information. 1. There are no other equity securities in addition to the ordinary shares. 2. There are no options or warrants outstanding to purchase ordinary shares. 3. There are no convertible debt securities. 4. Activity in ordinary shares during the year was as follows. Outstanding, Jan. 1 Treasury shares acquired, Oct. 1 Shares reissued, Dec. 1 Outstanding, Dec. 31 1,285,000 (250,000) 1,035,000 165,000 1,200,000 Direction Situation Explanation Financial Statements suc On the basis of the Information above, do you agree with the controller's computation of earnings per share for the year? If you disagree, prepare a revised computation of earnings per share. Assume the same tacts as those presented above, except that options had been issued to purchase 140,000 ordinary shares at R$10 per share. These options were outstanding at the beginning of the year and none had been exercised or canceled during the year. The average market price of the ordinary shares during the year was R$25, and the ending market price was R$35. What earnings per share amounts will be reported?