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On January 1, 2020, to motivate top management, Resume Inc. granted 2,600 options to purchase common stock at $10 per share to key officers if net income increased by 5% in 2020 over the prior year. The fair value of the options on January 1, 2020, is estimated to be $13,000. Resume Inc. reported net income of $130,000 in 2020, which represented a 7% increase over the prior year. How will the options affect the calculation of the company's 2020 diluted earnings per share? Increase the denominator ✓by 100 x shares.

On January 1, 2020, to motivate top management, Resume Inc. granted 2,600 options to purchase common stock at $10 per share to key officers if net income increased by 5% in 2020 over the prior year. The fair value of the options on January 1, 2020, is estimated to be $13,000. Resume Inc. reported net income of $130,000 in 2020, which represented a 7% increase over the prior year. How will the options affect the calculation of the company's 2020 diluted earnings per share? Increase the denominator ✓by 100 x shares.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, to motivate top management, Resume Inc. granted 2,600 options to purchase common stock at $10 per share to key officers if net income increased by 5% in 2020 over the prior year. The fair value of the options on January 1, 2020, is estimated to be $13,000. Resume Inc. reported net income of $130,000 in 2020, which represented a 7% increase over the prior year. How will the options affect the calculation of the company's 2020 diluted earnings per share? Increase the denominator ✓by 100 x shares.
Transcribed Image Text:On January 1, 2020, to motivate top management, Resume Inc. granted 2,600 options to purchase common stock at $10 per share to key officers if net income increased by 5% in 2020 over the prior year. The fair value of the options on January 1, 2020, is estimated to be $13,000. Resume Inc. reported net income of $130,000 in 2020, which represented a 7% increase over the prior year. How will the options affect the calculation of the company's 2020 diluted earnings per share? Increase the denominator ✓by 100 x shares.
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