Question

On December 31, 2020, Ainsworth, Inc., had 600 million shares of common stock outstanding. Sixteen million shares of 7%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2021. On April 30, 2021, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a 5% common stock dividend on June 12, 2021. No cash dividends were declared in 2021. For the year ended December 31, 2021, Ainsworth reported a net loss of $125 million, including an after-tax loss from discontinued operations of $370 million.

Required:
1. Compute Ainsworth's net loss per share for the year ended December 31, 2021.
2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2021.
3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2021 and 2020 comparative income statements. Assume EPS was reported in 2020 as $0.70, based on net income (no discontinued operations) of $420 million and a weighted-average number of common shares of 600 million.

Answer 1

Loss of the year	-125
Add;
Cumulative Pref.Devidend	-112
(16*7%*100)
Total Loss	-237

Calculation of weighted Average no. of share

Share at June12	600	x1.05	x1	630
Treasury stock	-30	x1.05	x8/12	-21
Issuance	20	x1	x4/12	6.667
				615.67

Net loss per share

=-237 / 615.67

=-0.38per share

2

Per share income from continuing operation

Loss	-125
Add:
Loss from Discontinued Operation	370
income from continuing operation	245
Less:
Cumulative Pref.Devidend	-112
(16*7%*100)
Net income	133

income from continuing operation per share

=133 / 615.67

=0.80 per share

3

Comparative Income statement	2016	2015
Earning per share
Income from Continuing Operation	0.8	0.69
Loss from Discontinued Operations	-1.18
Net incomes(loss)	-0.38	0.69

EPS for 2015

=420 /(600*1.04)

=0.67

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