The discussion after lunch now swung towards another acquired company. Mr. Kashz acquired SillyKonez, Inc., in 2016. The company mines and processes rare-earth metals required in the manufacture of silicon chips used for providing faster and cheaper telecommunication services. Mr. Kashz briefly explained the basic operating process and then proceeded to hand over the following current-year partial financial statements: Partial Income Statement Loss from Continuing Operations Discontinued operationsIncome, net of tax Net Income Current Year $(1,250,990) 3,035,040 $ 1,784,050 Partial Balance Sheet Liabilities: 5% Convertible Debt - Issued at $1,000 par* $ 8,113,000 $ 5,160,000 Stockholders' Equity: Common Stock, no par (1,032,000 shares issued and outstanding)** $3 Convertible and cumulative Preferred Stock, $100 par value (42,500 shares issued and outstanding)*** Additional Paid-in CapitalStock Options (employee options to acquire 167,500 shares)**** 4,250,000 (1,842,500) Notes to the Balance Sheet: * Each bond is convertible into 80 shares of common stock. The bonds are outstanding all year. ** The number of shares issued and outstanding did not change throughout the year. *** Each preferred share is convertible into eight shares of common stock. The firm did not declare any dividends during the year. The preferred stock was outstanding all year. **** The options are exercisable at $21 per share, and the average market price of the company's stock for the year is $35. The options were outstanding all year. Required: a. Based on the information provided, compute basic and diluted earnings per share for the current year. Include all computations related to the application of antidilution sequencing if needed. b. Prepare the required income statement disclosures beginning with loss from continuing operations. The discussion after lunch now swung towards another acquired company. Mr. Kashz acquired SillyKonez, Inc., in 2016. The company mines and processes rare-earth metals required in the manufacture of silicon chips used for providing faster and cheaper telecommunication services. Mr. Kashz briefly explained the basic operating process and then proceeded to hand over the following current-year partial financial statements: Partial Income Statement Loss from Continuing Operations Discontinued operationsIncome, net of tax Net Income Current Year $(1,250,990) 3,035,040 $ 1,784,050 Partial Balance Sheet Liabilities: 5% Convertible Debt - Issued at $1,000 par* $ 8,113,000 $ 5,160,000 Stockholders' Equity: Common Stock, no par (1,032,000 shares issued and outstanding)** $3 Convertible and cumulative Preferred Stock, $100 par value (42,500 shares issued and outstanding)*** Additional Paid-in CapitalStock Options (employee options to acquire 167,500 shares)**** 4,250,000 (1,842,500) Notes to the Balance Sheet: * Each bond is convertible into 80 shares of common stock. The bonds are outstanding all year. ** The number of shares issued and outstanding did not change throughout the year. *** Each preferred share is convertible into eight shares of common stock. The firm did not declare any dividends during the year. The preferred stock was outstanding all year. **** The options are exercisable at $21 per share, and the average market price of the company's stock for the year is $35. The options were outstanding all year. Required: a. Based on the information provided, compute basic and diluted earnings per share for the current year. Include all computations related to the application of antidilution sequencing if needed. b. Prepare the required income statement disclosures beginning with loss from continuing operations
