Reference no: EM13334992

Jim Company has reported basic earnings per Class A common share of $2.78. Jim has a tax rate of 40%. The average share price during the year was $24. Review each of the following items:

A. Class B non-voting cumulative $1 shares, 79,000 shares outstanding all year, convertible into Class A shares at the rate of four Class B shares for one Class A share. Dividends of $0.5 were declared this year and basic EPS properly reflects the dividend entitlement of these preferred shares.

B. Class A common stock options outstanding all year for 34,800 shares at a price of $47.

C. Class A common stock options outstanding all year for 34,800 shares at a price of $20.

D. Class A common stock options granted at the end of the fiscal year for 18,000 shares at $14 per share.

E. 11%, eight-year $5,400,000 convertible bonds outstanding all year, convertible into 17 Class A common shares for every $1,000 bond. A bond discount was recorded when the bond was originally issued and amortization of $47,750 was recorded on the discount this year. On issuance, $460,000 of common stock conversion rights were recorded in shareholders' equity.

F. 7%, 15-year, $9,800,000 convertible bonds outstanding all year, convertible into 24 Class A common shares for every $1,000 bond. A bond discount was recorded on issuance, and amortization of $21,200 was recorded on the discount this year. On issuance, $157,000 of common stock conversion rights were recorded in shareholders' equity.

G. 5%, 15-year, $9,800,000 convertible bonds outstanding at the beginning of the year, convertible into 20 Class A common shares for every $1,000 bond. A bond discount was recorded when the bond was originally issued, and amortization of $2,900 was recorded on the discount this year. On issuance, $157,000 of common stock conversion rights were recorded in shareholders' equity. The bonds converted into common stock on 1 April of the current year, and basic EPS properly reflects the common shares outstanding since 1 April.

Indicate whether each of the above items would be included or excluded in a calculation of diluted EPS. The solution should include the individual effect of each item, as applicable. Indicate the change to the numerator and denominator.

Item Numerator Denominator Individual effect
A Included or Excluded? $ $
B Included or Excluded? $ $
C Included or Excluded? $ $
D Included or Excluded? $ $
E Included or Excluded? $ $
F Included or Excluded? $ $
G Included or Excluded? $ $