Question

On December 31, 2020, Ainsworth, Inc., had 460 million shares of common stock outstanding. Seventeen million shares of 8%, $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 $130 million, including an after-tax loss from discontinued operations of $380 million.

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 $0.85, based on net income (no discontinued operations) of $391 million and a weighted-average number of common shares of 460 million.

Answer 1

1	Earning per share = Earnings Available for Equity Shareholder/Weighted average # shares of common stock outstanding
	Earnings Available for Equity Shareholder = Net Income - PreferredDividend
	= -$140 millions - (8%*17million shares*$100)
	= -$140 millions - $136 millions
	=-$276 millioms
	Weighted average # shares of common stock =
	period	Weighted Average No of shares outstanding
	1/1 - 31/12	460 millions shares*12/12*1.05 (inc.bonus)	483.00
	30/4 - 31/12	(30 million shares)*8months/12months*1.05 (inc. bonus)	(21.00)
	31/8-31/12	12 million shares*4months/12months	4.00
		Weighted average # shares	466.00
	Basic EPS = - $276/466 = $(0.59)
2	Determine the per share amount of income or loss from continuing operations for the year ended December 31, 2021
		$ in millions
	Incomefrom Continuing Operation	$                                                                         250.00
	Extraordinary loss, net of tax	$                                                                       (380.00)
	Net loss	$                                                                       (130.00)
	EPS for continuing operations = ($250 - $136) ÷ 466 = $0.25
3	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 $0.85, based on net income (no discontinued operations) of $391 million and a weighted-average number of common shares of 460 million.
	The 5% stock dividend issued on June 12, 2021 must be retroactively applied to 1/1/20
	Weighted average # shares for 2020: 460 x 1.05 = 483
	2020 EPS = $391 ÷ 483 = $0.81
	2021 EPS from Extraordinary loss = $(380) ÷ 466 = $(0.82)
		2021	2020
	EPS from continuing operations	0.25	0.81
	Extraordinary loss, net of tax	-0.82	0