Wiseman Electronics has an agreement with certain of its division managers that 50,000 contingently issuable shares will be issued next year in the event operating income exceeds $2.1 million that year. In what way, if any, is the calculation of EPS affected by these contingently issuable shares, assuming this year’s operating income was $2.2 million? $2.0 million?
Wiseman Electronics has an agreement with certain of its division managers that 50,000 contingently issuable shares will be issued next year in the event operating income exceeds $2.1 million that year. In what way, if any, is the calculation of EPS affected by these contingently issuable shares, assuming this year’s operating income was $2.2 million? $2.0 million?
Solution Summary: The author analyzes the effect of 50,000 contingently issuable shares on the computation of earnings per share.
Wiseman Electronics has an agreement with certain of its division managers that 50,000 contingently issuable shares will be issued next year in the event operating income exceeds $2.1 million that year. In what way, if any, is the calculation of EPS affected by these contingently issuable shares, assuming this year’s operating income was $2.2 million? $2.0 million?
What is the return on assets on this general accounting question?
Richard has the following potential liabilities:
William, a former employee, has sued Richard for $880,000. Richard contacted his attorney, and the case is believed to be
frivolous.
Carter sued Richard for an undisclosed amount for a class action lawsuit. Richard thinks it's frivolous, but his attorneys
indicate a loss is probable for $88,000.
Charles sued Richard because he slipped outside of Richard's store. The claim is $264,000 and Richard is certain he will lose
the case but believes Charles will settle. The attorneys agree and based on conversations with Charles's attorneys, have stated
that it is remote the claim will be settled for $255,200. Charles's attorneys indicated he would be willing to accept either cash
of $242,000 or shares of Richard's closely-held common stock currently valued at $233,200. Richard would prefer not to
settle in cash.
Richard is suing William for $264,000 because William is in violation of a non-compete agreement he has with Richard.
Richard is…
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