The Controller of Valiant Motorcycles has given you the responsibility of calculating the earnings per share figures for the year ended 12/31/X7. The following information is provided. Common stock transactions As of 1/1/X7, the company had 6,000,000 authorized shares of $1 stated value common stock, and 710,000 shares issued and outstanding. - 10/1/X7, issued in a 2 for 1 stock split. After the stock split, the stated value was reduced to $0.50 per share and there were 12,000,000 authorized shares. - 12/1/X7, issued 180,000 shares at $52 per share (post-split price) Treasury stock transactions (accounted for using the par value method) - 3/31/X7 purchased 20,000 shares at $105 per share - 7/1/X7 sold 8,000 shares at $102 per share. Stock Warrants On 1/1/X7,30,000 warrants were issued at $10 each. Initially, each warrant allowed the bearer to exchange the warrant and $36 for one share of common stock. Effective 10/1/X7, each warrant became exchangeable for two common shares at a price of $18 per share. No warrants were exercised during 207. Convertible Bonds $2,000,000 of unsecured, convertible, 15 -year, 4% bonds were issued on 1/1/X5. The initial conversion rate was 20 shares of common stock for each $1,000 bond. Effective 10/1/X7, the conversion rate became 40 shares per $1,000 bond. As of 12/31/X7, all bonds were still outstanding and unconverted, and all semi-annual interest payments had been paid. No bonds were converted during 207. Net Income During 20X7, the company reported $3,100,000 of net income. Tax Rate The company's applicable tax rate is 32% Common stock prices Beginning, quarterly, ending, and average prices for the company's common stock are provided below. *Annual average adjusted for the stock split on 10/1/X7. 2. Diluted Earnings Per Share (EPS): To calculate the diluted EPS, we need to consider the impact of potentially dilutive securities, such as stock warrants and convertible bonds. a) Stock Warrants: As of January 1,X7,30,000 warrants were issued at $10 each. Initially, each warrant allowed the bearer to exchange the warrant and $36 for one share of common stock. Effective October 1,X7, each warrant became exchangeable for two common shares at a price of $18 per share. No warrants were exercised during 207. Since the average market price of common stock exceeds the exercise price of the warrants, they are considered dilutive. Warrants outstanding =30,000 Dilutive shares from warrants =(30,0002)=60,000 b) Convertible Bonds: $2,000,000 of unsecured, convertible, 15-year, 4% bonds were issued on January 1,X. The initial conversion rate was 20 shares of common stock for each $1,000 bond. Effective October 1,X7, the conversion rate became 40 shares per $1,000 bond. As of December 31 , X7, all bonds were still outstanding and unconverted. Since the average market price of common stock exceeds the conversion price of the bonds, they are considered dilutive. Convertible bonds outstanding =$2,000,000 Dilutive shares from convertible bonds =($2,000,000 * 40)/$1,000=80,000 c) Weighted Average Number of Diluted Shares: To calculate the weighted average number of diluted shares, we need to add the dilutive shares from warrants and convertible bonds to the weighted average number of common shares outstanding. Weighted average number of diluted shares = Weighted average number of common shares outstanding + Dilutive shares from warrants + Dilutive shares from convertible bonds Weighted average number of diluted shares =1,060,000+60,000+80,000 Weighted average number of diluted shares =1,200,000 d) Diluted Earnings Per Share (EPS): Diluted EPS = Net Income / Weighted Average Number of Diluted Shares Diluted EPS =$3,100,000/1,200,000 Diluted EPS =$2.58 *** If these are the calculations to achieve the Diluted EPS, what are the SPECIFIC ASC case numbers, ex. ASC XXX-XX-XX-X. that justify these calculations? *** asc.fasb.org musted be used. ASC changes all the time and google searches can result in old case numbers that are no longer valid.***