Aiken Corporation has compensatory share options for employees to purchase 4,000 common shares at $12 per share outstanding the entire year. The average market price for the common stock during the year was $20 per share. The unrecognized compensation cost (net of tax) related to the share options is $1 per share. What is the assumed increment in the denominator for computing Aiken’s diluted earnings per share?
Identify the assumed increment given in the denominator for computing Company A diluted earnings per share.
Earnings per share (EPS): The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).
Particulars | Â |
Shares issued from assumed exercise | 4,000 |
Shares assumed reacquired (1) | (2,600) |
Assumed increment in common shares for computing dilutedearnings per share | 1,400 |
(Table 1)
Working note:
(1) Calculate the shares that are assumed to be reacquired:
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