Computing Basic and Diluted EPS, Convertible Bonds, Options, Convertible Preferred Stock, Antidilution, Disclosures. Menon Company provided the following share information for the current year.
Event and Date | Number of Shares |
1/1 Beginning balance | 150,000 |
6/1 New share issue | 240,000 |
8/1 Two-for-one stock split | |
10/1 New share issue | 390,000 |
12/1 |
(48,000) |
Merion reported income from continuing operations of $1,000,000 and a $430,000 loss from discontinued operations net of tax. The company is subject to a 40% tax rate. The company granted 120,000 employee options on January 1 that allow employees to acquire 120,000 common shares at $18 per share. The options have an estimated fair value of $10 per share. The average market price of the company’s common shares is $24 per share. Merion has $500,000 6% convertible debt outstanding as of the beginning of the year. Each $1,000 par
Required
- a. Compute the weighted-average number of common shares outstanding for basic earnings per share.
- b. Determine whether any securities are antidilutive, and compute basic and diluted earnings per share. Show all computations.
- c. Prepare all required disclosures beginning with income from continuing operations.
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