Calculate the diluted earnings per share for each quarter

Assignment Help Accounting Basics

Reference no: EM132817643

Question - EPS, Stock Option Compensation

a) Calculate the compensation expense for 2021,2022, and 2023 under IFRS.

On 1/1/2021 a company granted 48,000 stock options to top executives. The options vest in two tranches: 24,000 options on 7/1/2022, and 24,000 options on 12/31/2023. The value of each option was determined to be $9 on the grant date.

b) In US GAAP there is a policy election as to how to account for the graded vesting award. What are the two policies allowed? Assume the company is using the single-award approach, and calculate the compensation expense for 2021,2022, and 2023 under US GAAP.

c) Assume that throughout 2024, all 48,000 options were still outstanding (so the top executives were able to exercise them but chose not to). The options had an exercise price of $30. The company had 30,000 common shares outstanding throughout the year. The company earned $150,000 every quarter. The average share price during each quarter was: $32 (1st quarter), $48 (2nd quarter), $32 (3rd quarter), $32 (4th quarter). Assuming there are no additional potentially dilutive securities outstanding:

i. Calculate the diluted Earnings per Share for each quarter (Note: there is no difference between IFRS and US GAAP in the quarterly diluted EPS. Also remember that in the diluted EPS we add the incremental shares we calculated using the treasury stock method to the denominator, and we do not change the numerator).

ii. What is the annual diluted EPS in IFRS and US GAAP?

Reference no: EM132817643

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