In this question, how did they get the 1.05 plug?

8 On December 31, 2020, Ainsworth, Inc., had 800 million shares of common stock outstanding. Twenty five million shares of 6%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2021. On April 30, 2021, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2021. No cash dividends were declared in 2021. For the year ended December 31, 2021, Ainsworth reported a net loss of $165 million, including an after-tax loss from discontinued operations of $450 million.

Required:

1.Compute Ainsworth's net loss per share for the year ended December 31, 2021.

2.Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2021.

3.Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2021 and 2020 comparative income statements. Assume EPS was reported in 2020 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.

Complete this question by entering your answers in the tabs below.

Req 1 and 2

o

entered as 10).)

Numerator

/

Denominator

=

Net Loss Per Share

1.

$(315)

/

823

=

$(0.38)

Numerator

/

Denominator

Income/Loss from Continuing Operations Per Share

2.

$135

/

823

=

$0.16

Complete this question by entering your answers in the tabs below.

Req 1 and 2

o

o

Req 3

o

o

Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2021 and 2020 comparative income statements. Assume EPS was reported in 2020 as $0.65, based on net income (no discontinued operations) of $520 million and a weighted-average number of common shares of 800 million.(Round your answersto 2 decimal places. Loss amounts should be indicated with a minus sign.)

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AINSWORTH, INC.

2021 and 2020 Comparative Income Statement

2021

2020

Earnings (Loss) Per Common Share:

Income from continuing operations

+/-1$0.16

$0.62

Loss from discontinued operations

+/-1(0.54)

Net income (loss)

+/-2$(0.38)

$0.62

Explanation

1.

Net loss per share for the year ended December 31, 2021:

(amounts in millions, except per share amount)

net

loss

preferred

dividends

Net Loss

Per Share

$165

$150¹

=

$315

= ($0.38)

800 (1.05)

30 (⁸/₁₂)

(1.05)

+ 12 (⁴/₁₂)

823

shares at

January 1

treasury

shares

new

shares

stock dividend

adjustment

2.

Per share amount of income or loss from continuing operations for the year ended December 31, 2021:

(amounts in millions, except per share amount)

operating

income

preferred

dividends

Income from

Continuing

Operations

Per Share

$285²

$150¹

=

$135

= $0.16

800 (1.05)

30 (⁸/₁₂)

(1.05)

+ 12 (⁴/₁₂)

823

shares at

January 1

treasury

shares

new

shares

stock dividend

adjustment

¹25 million shares $100 6% = $150 million

²$450 $165 = $285 million

3.

2021 and 2020 comparative income statements:

(amounts in millions, except per share amount)

Note: The weighted-average number of common shares in 2020 should be adjusted for the stock dividend in 2021 for the purpose of reporting 2020 EPS in subsequent years for comparative purposes:

net

income

Earnings

Per Share

$520

=

$520

=

$0.62

800

(1.05)

840

shares at

January 1

stock dividend

adjustment