Wheeler Company began 2010 with 10,000 shares of $10 par common stock and 2,000 shares of 9.4%, $100 par, convertible preferred stock outstanding. On April 2 and June 1, respectively, the company issued 2,000 and 6,000 additional shares of common stock. On November 16 the company declared a two-for-one stock split. Compensatory share options that currently allow the purchase of 2,000 shares of common stock at $16 per share were outstanding during 2010. To date, none of these options have been exercised. The unrecognized compensation cost (net of tax) related to these options is $2 per share. The preferred stock was issued in 2009. Each share of preferred stock is currently convertible into 4 shares of common stock. To date, no preferred stock has been converted. Current dividends have been paid on both preferred and common stock. Net income for 2010 totaled $109,800. The company is subject to a 30% income tax rate. The common stock sold at an average market price of $24 per share during 2010.

Required

1. Prepare supporting calculations for Wheeler Company and compute its:

a. Basic earnings per share

b. Diluted earnings per share

2. Show how Wheeler Company would report the earnings per share on its 2010 income statement. Include an accompanying note to the financial statements.

3. Assume Wheeler Company uses IFRS. Discuss what Wheeler Company would do differently for computing earnings per share, and then repeat Requirement 1 under IFRS.