Anderson Steel Company began 2018 with 600,000 shares of common stock outstanding. On March 31, 2018,100,000 new shares were sold at a price of $45 per share. The market price has risen steadily since that time toa high of $50 per share at December 31. No other changes in shares occurred during 2018, and no securities areoutstanding that can become common stock. However, there are two agreements with officers of the company forfuture issuance of common stock. Both agreements relate to compensation arrangements reached in 2017. Thefirst agreement grants to the company president a right to 10,000 shares of stock each year the closing market priceis at least $48. The agreement begins in 2019 and expires in 2022. The second agreement grants to the controller aright to 15,000 shares of stock if she is still with the firm at the end of 2026. Net income for 2018 was $2,000,000.Required:Compute Anderson Steel Company’s basic and diluted EPS for the year ended December 31, 2018.
Anderson Steel Company began 2018 with 600,000 shares of common stock outstanding. On March 31, 2018,
100,000 new shares were sold at a price of $45 per share. The market price has risen steadily since that time to
a high of $50 per share at December 31. No other changes in shares occurred during 2018, and no securities are
outstanding that can become common stock. However, there are two agreements with officers of the company for
future issuance of common stock. Both agreements relate to compensation arrangements reached in 2017. The
first agreement grants to the company president a right to 10,000 shares of stock each year the closing market price
is at least $48. The agreement begins in 2019 and expires in 2022. The second agreement grants to the controller a
right to 15,000 shares of stock if she is still with the firm at the end of 2026. Net income for 2018 was $2,000,000.
Required:
Compute Anderson Steel Company’s basic and diluted EPS for the year ended December 31, 2018.
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