Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

28 pints 8 00:37:00 Witter House is a calendar-year firm with 450 million common shares outstanding throughout 2018 and 2019. As part of its executive

image text in transcribed
28 pints 8 00:37:00 Witter House is a calendar-year firm with 450 million common shares outstanding throughout 2018 and 2019. As part of its executive compensation plan, at January 1, 2017, the company had issued 35 million executive stock options permitting executives to buy 35 million shares of stock for $15 within the next eight years, but not prior to January 1, 2020. The fair value of the options was estimated on the grant date to be $3 per option. In 2018, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 20 million restricted common shares to senior executives at January 1, 2018. The shares vest four years later. The fair value of the stock was $16 per share on the grant date. The average price of the common shares was $16 and $25 during 2018 and 2019, respectively. The stock options qualify for tax purposes as an incentive plan. The restricted stock does not. The company's net income was $300 million and $310 million in 2018 and 2019, respectively. Its income tax rate is 40%. Required: 1. Compute basic and diluted earnings per share for Witter House in 2018. 2. Compute basic and diluted earnings per share for Witter House in 2019, (For all requirements, do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (ie., 10,000,000 should be entered as 10.00).) eBook Numerator Denominator Earnings per share 1. Basic

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Software Reviews And Audits A How To Guide For Project Staff

Authors: Dr David Tuffley

1st Edition

1461130468, 978-1461130468

More Books

Students also viewed these Accounting questions

Question

Identify conflict triggers in yourself and others

Answered: 1 week ago