(Note: This is a variation of E 19–16, modified to include stock options.) On December 31, 2017, Berclair Inc.had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stockissued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasurystock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold onOctober 1. Net income for the year ended December 31, 2018, was $150 million.Also outstanding at December 31 were 30 million incentive stock options granted to key executives onSeptember 13, 2013. The options were exercisable as of September 13, 2017, for 30 million common shares atan exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.Required:Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018.
(Note: This is a variation of E 19–16, modified to include stock options.) On December 31, 2017, Berclair Inc.
had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock
issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury
stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on
October 1. Net income for the year ended December 31, 2018, was $150 million.
Also outstanding at December 31 were 30 million incentive stock options granted to key executives on
September 13, 2013. The options were exercisable as of September 13, 2017, for 30 million common shares at
an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share.
Required:
Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018.
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