Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday's income for 2020 was $110,000 or more, 10,000 additional shares would be issued to Holiday's stockholders in 2021. Holiday's income for 2019 was $120,000. Instructions a. Would the contingent shares have to be considered in Winsor's 2019 earnings per share computations? b. Assume the same facts, except that the 10,000 shares are contingent on Holiday's achieving a net income of $130,000 in 2020. Would the contingent shares have to be considered in Winsor's earnings per share computations for 2019?
Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday's income for 2020 was $110,000 or more, 10,000 additional shares would be issued to Holiday's stockholders in 2021. Holiday's income for 2019 was $120,000. Instructions a. Would the contingent shares have to be considered in Winsor's 2019 earnings per share computations? b. Assume the same facts, except that the 10,000 shares are contingent on Holiday's achieving a net income of $130,000 in 2020. Would the contingent shares have to be considered in Winsor's earnings per share computations for 2019?
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 34P
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Question
Winsor Inc. recently purchased Holiday Corp., a large midwestern home painting corporation. One of the terms of the merger was that if Holiday's income for 2020 was $110,000 or more, 10,000 additional shares would be issued to Holiday's stockholders in 2021. Holiday's income for 2019 was $120,000.
Instructions
a. Would the contingent shares have to be considered in Winsor's 2019 earnings per share computations?
b. Assume the same facts, except that the 10,000 shares are contingent on Holiday's achieving a net income of $130,000 in 2020. Would the contingent shares have to be considered in Winsor's earnings per share computations for 2019?
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