Question

Which of the following statements is incorrect? 1. The treasury stock method is used for written...

Which of the following statements is incorrect?


1. The treasury stock method is used for written call options.

2. Corporations that have only antidilutive securities are not permitted to increase their earnings per share and are required to report only basic earnings per share.

3. Options that are out of the money are ignored in earnings per share calculations.

4. Contingently issuable shares are never included in diluted earnings per share calculation
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:4. Contingently issuable shares are never included in diluted earnings per share calculation

Contingently issuable shares are treated as outstanding and and included in the calculation of both basic and dilutes EPS if the conditions have been met.If the conditions have not been met, the number of contingently issuable shares included in the diluted EPS calculation is based on the number of shares that would be issuable if the end of the period were the end of the contingency period.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Information from the financial statements of Topps Fambricators, Inc., Included the following : Common shares 100,000...
Information from the financial statements of Topps Fambricators, Inc., Included the following : Common shares 100,000 Convertible preferred shares $100 par, 5% (convertible into 36,000 shares of common) 12,000 10% convertible bonds (convertible into 25,000 shares of common) $1,000,000 Stock options for 120,000 shares of common stock (option price of $20 per share; market price of $25 per share) Topps's net income for the year ended December 31,2018, is $680,000. The income tax rate is 40%. Topps paid dividends of...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2021...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2021 2020 Common shares 100,000 100,000 Convertible preferred shares (convertible into 80,000 shares of common) 31,200 31,200 8% convertible bonds (convertible into 30,000 shares of common) $ 1,000,000 $ 1,000,000 Ames’s net income for the year ended December 31, 2021, is $820,000. The income tax rate is 25%. Ames paid dividends of $5 per share on its preferred stock during 2021. Required: Compute basic and...
Riggs Corporation has the following balance sheet information at December 31, 2016. Current liabilities $ 800,000...
Riggs Corporation has the following balance sheet information at December 31, 2016. Current liabilities $ 800,000 Convertible bonds ($1,000 par, 5%) 2,000,000 Common stock ($1 par, 300,000 shares issued 300,000 Additional paid-in capital 2,100,000 Retained earnings 3,230,000 Treasury stock (43,000 shares) (1,161,000 ) Total liabilities and shareholders’ equity $ 7,269,000 The convertible bonds were issued at par in 2014 and are convertible into Riggs’s common stock at a ratio of 15 shares of stock to 1 bond. In its December...
Information from the financial statements of Topps Fambricators, Inc., Included the following : Common shares 100,000...
Information from the financial statements of Topps Fambricators, Inc., Included the following : Common shares 100,000       Convertible preferred shares $100 par, 5% (convertible into 36,000 shares of common) 12,000       10% convertible bonds (convertible into 25,000 shares of common) $1,000,000       Stock options for 120,000 shares of common stock (option price of $20 per share; market price of $25 per share) Topps's net income for the year ended December 31,2018, is $680,000. The income tax rate is 40%. Topps...
On December 31, 2020, Berclair Inc. had 420 million shares of common stock and 6 million...
On December 31, 2020, Berclair Inc. had 420 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 112 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $700 million. Also outstanding at December...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2021...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2021 2020 Common shares 100,000 100,000 Convertible preferred shares (convertible into 78,000 shares of common) 30,000 30,000 8% convertible bonds (convertible into 30,000 shares of common) $ 1,000,000 $ 1,000,000 Ames’s net income for the year ended December 31, 2021, is $800,000. The income tax rate is 25%. Ames paid dividends of $5 per share on its preferred stock during 2021. Required: Compute basic and...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2021...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2021 2020 Common shares 100,000 100,000 Convertible preferred shares (convertible into 44,000 shares of common) 15,600 15,600 8% convertible bonds (convertible into 30,000 shares of common) $ 1,000,000 $ 1,000,000 Ames’s net income for the year ended December 31, 2021, is $560,000. The income tax rate is 25%. Ames paid dividends of $5 per share on its preferred stock during 2021. Required: Compute basic and...
Assume that the following data relative to Eddy Company for 2013 is available: Net Income: $2,100,000;...
Assume that the following data relative to Eddy Company for 2013 is available: Net Income: $2,100,000; 1,320,000 shares of common shares outstanding for the whole year. transactions in common shares: May purchase of 60,000 treasury shares June stock split 2-1 Nov issuance of 120,000 shares 8% Cumulative Convertible Preferred Stock: $1,000,000, convertible into 200,000 shares of common stock. (adjusted for split) Stock Options: exercisable to 60,000 shares of common stock at the price of $25 per share. Average market price...
You have been provided with accounting research tools. Use them to answer the following multiple choice...
You have been provided with accounting research tools. Use them to answer the following multiple choice questions. After you make your choice, tell me what theory you are basing your answer on, or what part of the codification applies to the question (explain). As you may have guessed, this is an open book quiz. The treasury stock method of computing diluted earnings per share will increase the number of shares outstanding whenever the exercise price of an option or a...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2018...
Information from the financial statements of Ames Fabricators, Inc., included the following:    December 31 2018 2017 Common shares 100,000 100,000 Convertible preferred shares (convertible into 34,000 shares of common) 13,200 13,200 10% convertible bonds (convertible into 20,000 shares of common) $ 1,000,000 $ 1,000,000 Ames’s net income for the year ended December 31, 2018, is $520,000. The income tax rate is 40%. Ames paid dividends of $5 per share on its preferred stock during 2018. Required: Compute basic and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT