Witter House is a calendar-year firm with 430 million common shares outstanding throughout 2021 and 2022. As part of its executive compensation plan, at January 1, 2020, the company had issued 60 million executive stock options permitting executives to buy 60 million shares of stock for $12 within the next eight years, but not prior to January 1, 2023. The fair value of the options was estimated on the grant date to be $2 per option. In 2021, 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, 2021. The shares vest four years later. The fair value of the stock was $16 per share on the grant date. The average price of the common shares was $16 and $20 during 2021 and 2022, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $280 million and $290 million in 2021 and 2022, respectively. Required: 1. Compute basic and diluted earnings per share for Witter House in 2021. 2. Compute basic and diluted earnings per share for Witter House in 2022. (For all requirements, do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answers to 2 decimal places.) Numerator 1. Basic $ 280 Diluted $ 280 2. Basic Diluted 6969 Answer is not complete. Denominator 430 = 466.00 = 290 430 = 290 450.00 = Earnings per share 0.65 6969 0.67 1.00
Witter House is a calendar-year firm with 430 million common shares outstanding throughout 2021 and 2022. As part of its executive compensation plan, at January 1, 2020, the company had issued 60 million executive stock options permitting executives to buy 60 million shares of stock for $12 within the next eight years, but not prior to January 1, 2023. The fair value of the options was estimated on the grant date to be $2 per option. In 2021, 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, 2021. The shares vest four years later. The fair value of the stock was $16 per share on the grant date. The average price of the common shares was $16 and $20 during 2021 and 2022, respectively. The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $280 million and $290 million in 2021 and 2022, respectively. Required: 1. Compute basic and diluted earnings per share for Witter House in 2021. 2. Compute basic and diluted earnings per share for Witter House in 2022. (For all requirements, do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e., 10,000,000 should be entered as 10). Round "Earnings per share" answers to 2 decimal places.) Numerator 1. Basic $ 280 Diluted $ 280 2. Basic Diluted 6969 Answer is not complete. Denominator 430 = 466.00 = 290 430 = 290 450.00 = Earnings per share 0.65 6969 0.67 1.00
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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Transcribed Image Text:Witter House is a calendar-year firm with 430 million common shares outstanding throughout 2021 and 2022. As part of its executive
compensation plan, at January 1, 2020, the company had issued 60 million executive stock options permitting executives to buy 60
million shares of stock for $12 within the next eight years, but not prior to January 1, 2023. The fair value of the options was estimated
on the grant date to be $2 per option.
In 2021, 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, 2021. The shares vest four years later. The fair value of
the stock was $16 per share on the grant date. The average price of the common shares was $16 and $20 during 2021 and 2022,
respectively.
The stock options qualify as an incentive plan. The restricted stock does not. The company's net income was $280 million and $290
million in 2021 and 2022, respectively.
Required:
1. Compute basic and diluted earnings per share for Witter House in 2021.
2. Compute basic and diluted earnings per share for Witter House in 2022.
(For all requirements, do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places (i.e.,
10,000,000 should be entered as 10). Round "Earnings per share" answers to 2 decimal places.)
Numerator
1. Basic
$
280
Diluted
$
280
2.
Basic
Diluted
6969
Answer is not complete.
Denominator
430 =
466.00 =
290
430
=
290
450.00
=
Earnings per
share
0.65
6969
0.67
1.00
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