Witter House is a calendar-year firm with 350 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 55 million executive stock options permitting executives to buy 55 million shares of stock for $12 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 20 million restricted common shares to senior executives at January 1, 2024. The shares vest four years later. The fair value of the stock was $13 per share on the grant date. • The average price of the common shares was $13 and $20 during 2024 and 2025, respectively. • The stock options qualify as an incentive plan. . The restricted stock does not. • The company's net income was $200 million and $210 million in 2024 and 2025, respectively. Required: 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. 1. 2. Basic Diluted Basic Diluted Numerator + + + + Denominator = Earnings per share = ▪▪▪▪ = = =
Witter House is a calendar-year firm with 350 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 55 million executive stock options permitting executives to buy 55 million shares of stock for $12 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 20 million restricted common shares to senior executives at January 1, 2024. The shares vest four years later. The fair value of the stock was $13 per share on the grant date. • The average price of the common shares was $13 and $20 during 2024 and 2025, respectively. • The stock options qualify as an incentive plan. . The restricted stock does not. • The company's net income was $200 million and $210 million in 2024 and 2025, respectively. Required: 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. 1. 2. Basic Diluted Basic Diluted Numerator + + + + Denominator = Earnings per share = ▪▪▪▪ = = =
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Vishnu
Transcribed Image Text:Witter House is a calendar-year firm with 350 million common shares outstanding throughout 2024 and 2025. As part of its executive
compensation plan, at January 1, 2023, the company had issued 55 million executive stock options permitting executives to buy 55
million shares of stock for $12 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 20 million restricted common shares to senior executives at January 1, 2024.
. The shares vest four years later.
• The fair value of the stock was $13 per share on the grant date.
• The average price of the common shares was $13 and $20 during 2024 and 2025, respectively.
• The stock options qualify as an incentive plan.
. The restricted stock does not.
• The company's net income was $200 million and $210 million in 2024 and 2025, respectively.
Required:
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.
1.
2.
Basic
Diluted
Basic
Diluted
Numerator +
+
+
+
Denominator
=
Earnings per share
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education