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Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 30 million executive stock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but not prior to January 1, 2026. The fair value of the options was estimated on the grant date to be $3 per option. In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 15 million restricted common shares to senior executives at January 1, 2024. The shares vest three years later. The fair value of the stock was $12 per share on the grant date. The average price of the common shares was $12 and $15 during 2024 and 2025, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company’s net income was $150 million and $160 million in 2024 and 2025, respectively. Compute basic and diluted earnings per share for Witter House in 2024. Compute basic and diluted earnings per share for Witter House in 2025. Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. Round "Denominator" answers to 2 decimal places.         Numerator ÷ Denominator = Earnings per share   1. Basic $150 ÷ 300 = $0.50     Diluted $150 ÷ 450.00 wrong = $0.33 wrong   2. Basic  $160 ÷ 300 = $0.53     Diluted $160 ÷ 450 wrong = $0.36 wrong

Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 30 million executive stock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but not prior to January 1, 2026. The fair value of the options was estimated on the grant date to be $3 per option. In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 15 million restricted common shares to senior executives at January 1, 2024. The shares vest three years later. The fair value of the stock was $12 per share on the grant date. The average price of the common shares was $12 and $15 during 2024 and 2025, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company’s net income was $150 million and $160 million in 2024 and 2025, respectively. Compute basic and diluted earnings per share for Witter House in 2024. Compute basic and diluted earnings per share for Witter House in 2025. Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. Round "Denominator" answers to 2 decimal places.         Numerator ÷ Denominator = Earnings per share   1. Basic $150 ÷ 300 = $0.50     Diluted $150 ÷ 450.00 wrong = $0.33 wrong   2. Basic  $160 ÷ 300 = $0.53     Diluted $160 ÷ 450 wrong = $0.36 wrong

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter15: Contributed Capital
Section: Chapter Questions
Problem 7RE: On January 1, 2019, Phoenix Corporation adopts a performance-based share option plan for 25...
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Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 30 million executive stock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but not prior to January 1, 2026.

  • The fair value of the options was estimated on the grant date to be $3 per option.
  • In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 15 million restricted common shares to senior executives at January 1, 2024.
  • The shares vest three years later.
  • The fair value of the stock was $12 per share on the grant date.
  • The average price of the common shares was $12 and $15 during 2024 and 2025, respectively.
  • The stock options qualify as an incentive plan.
  • The restricted stock does not.
  • The company’s net income was $150 million and $160 million in 2024 and 2025, respectively.
  1. Compute basic and diluted earnings per share for Witter House in 2024.
  2. Compute basic and diluted earnings per share for Witter House in 2025.

    Note: Do not round intermediate calculations. Except for per share amounts, enter your answers in millions (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answer to 2 decimal places. Round "Denominator" answers to 2 decimal places.

     
     
        Numerator ÷ Denominator = Earnings per share  
    1. Basic $150 ÷ 300 = $0.50  
      Diluted $150 ÷ 450.00 wrong = $0.33 wrong  
    2. Basic  $160 ÷ 300 = $0.53  
      Diluted $160 ÷ 450 wrong = $0.36 wrong  
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