Earnings per share (EPS) : The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock , and stock options, reduce the EPS by increasing the common shares. Treasury stock : The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock. To determine : The weighted average number of shares to be included in the computation of EPS

Question

qw.128. On January 1, 2021, Adams-Meneke Corporation granted 60 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, currently $16 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Management’s 1.) Total Compensation Cost 2.) Record compensation expense on December 31, 2021. 3.) Record the compensation expense.

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Chapter 19, Problem 19.14BE

To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

To determine: The weighted average number of shares to be included in the computation of EPS

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qw.128. On January 1, 2021, Adams-Meneke Corporation granted 60 million incentive stock options to division managers, each permitting holders to purchase one share of the company’s $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, currently $16 per share. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Management’s 1.) Total Compensation Cost 2.) Record compensation expense on December 31, 2021. 3.) Record the compensation expense.

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