DJ Co. is a calendar-year firm with 120 million common shares outstanding throughout 2011. As part of its executive compensation plan, at January 1, 2010, the company had issued 12 million executive stock options permitting executives to buy 12 million shares of stock for $10 each within the next eight years, but not prior to January 1, 2013. The fair value of the options was estimated on the grant date to be $3 per option. The stock options qualify for tax purposes as an incentive plan. The company's net income was $480 million in 2011. Its income tax rate is 40%. The average market price of the stock during 2011 was $12 per share. Required: Determine (1) basic and (2) diluted earnings per share (rounded to two decimal places) for DJ in 2011. (amounts in millions, except per share amount) Question 8 (10 Points) L Company discovered that a three-year insurance premium payment of $240,000 one year ago was debited to insurance expense. Required: 1. What action is required? Ignore taxes. Describe in word, no journal entry is needed. 2. What action is required if the error is not discovered until 4 years after it occurred? Describe in word, no journal entry is needed