44 Corporation A offers to issue additional shares of common stock in five years to Corporation B. The issuance of stock is contingent on Corporation B achieving minimum earnings. Corporation B meets the earnings requirement in the first quarter of Year Two. Which action will Corporation A take once the contingent earnings have been achieved? O Corporation A will not include the number of contingent shares in its earnings per share calculation. Corporation A will report its basic earnings per share and issue the shares to Corporation B. O Corporation A will include the number of contingent shares in its earnings per share calculation. Corporation A will include a proportionate number of shares of the contingent shares in its earnings per share calculation.
44 Corporation A offers to issue additional shares of common stock in five years to Corporation B. The issuance of stock is contingent on Corporation B achieving minimum earnings. Corporation B meets the earnings requirement in the first quarter of Year Two. Which action will Corporation A take once the contingent earnings have been achieved? O Corporation A will not include the number of contingent shares in its earnings per share calculation. Corporation A will report its basic earnings per share and issue the shares to Corporation B. O Corporation A will include the number of contingent shares in its earnings per share calculation. Corporation A will include a proportionate number of shares of the contingent shares in its earnings per share calculation.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter13: Corporations: Earning & Profits And Distributions
Section: Chapter Questions
Problem 29P
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Transcribed Image Text:44 Corporation A offers to issue additional shares of common stock in five years to Corporation B. The issuance of stock is contingent on Corporation B achieving minimum earnings. Corporation B meets the
earnings requirement in the first quarter of Year Two.
Which action will Corporation A take once the contingent earnings have been achieved?
O Corporation A will not include the number of contingent shares in its earnings per share calculation.
Corporation A will report its basic earnings per share and issue the shares to Corporation B.
O Corporation A will include the number of contingent shares in its earnings per share calculation.
Corporation A will include a proportionate number of shares of the contingent shares in its earnings per share calculation.
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