Answered: Throughout 1998, J Co. had 10,000…

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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Question

Throughout 1998, J Co. had 10,000 ordinary shares outstanding. There was no potential dilution
of earnings per share except as follows:
In 20x7, J Co. agreed to issue 2,000 additional shares of its stock to the former stockholders of an
acquired company if the acquired company's earnings for any of the five years 20x8 through 2x12
exceeded ₱5,000.

Results of operations for 20x8 were:
Profit of J Co. ₱10,000
Profit of acquired company 4,000
Consolidated profit ₱14,000
Diluted earnings per share for 1998 on a consolidated basis would be
a. ₱14,000 ÷ 10,000 = ₱1.40 c. ₱15,000 ÷ 10,000 = ₱1.50
b. ₱14,000 ÷ 12,000 = ₱1.17 d. ₱15,000 ÷ 12,000 = ₱1.25

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