Question

Crane Inc., a publicly traded company, had 291,000 common shares outstanding on December 31, 2019. During 2020, the company issued 6,600 shares on May 1 and retired 15,000 shares on October 31. For 2020, the company reported net income of $294,530 after a loss from discontinued operations of $44,000 (net of tax). Calculate earnings per share for 2020 as it should be reported to shareholders. (Round answer to 2 decimal places, e.g. 15.25.) Earnings per share Income per share before discontinued operations $ Discontinued operations loss per share, net of tax $ Net income per share $ Assume that Crane Inc. issued a 3-for-1 stock split on January 31, 2021, and that the company’s financial statements for the year ended December 31, 2020 were issued on February 15, 2021. Calculate earnings per share for 2020 as it should be reported to shareholders. b(Round answer to 2 decimal places, e.g. 15.25.) Earnings per share Income per share before discontinued operations $ Discontinued operations loss per share, net of tax $ Net income per share $ Is it possible for a corporation to have a simple capital structure one fiscal year and a complex capital structure in another fiscal year? Choose the answer from the menu in accordance to the question statement

Answer 1

Note-1	Calculation of Weighted Avererage Number of Shares
Period	Number of Shares	Month's Outstanding	Weights	Weighted Average No. Of Shares
1Jan 2020 to 30 April 2020	291000	4	4/12	97000
1May 2020 to 31 Oct 2020	297600	6	6/12	148800
1Nov 2020 to 31 Dec 2020	282600	2	2/12	47100
Weighted Average Number Of Shares	292900

Note-2	Calculation of Net Income Before Discontinued Operations:
	Net income after loss from discontinued operations	$	294,530.00
	Loss from discontinued operations	$	44,000.00
	Net Income from continuing Operations	$	338,530.00

1. Calculation of EPS from Continuing Operations

EPS =Net Income available to common stock holders from Continueing Operatiosn÷ Weighted Average Number of Shares

338530÷ 292900

1.16

2. Calculation of Loss from Discontinued Operations per share

Loss per Share =Loss from Discontinued Operations÷ Weighted Average Number of Shares

(44000)/292900

-0.15

3. Calculation of EPS on Net Income

EPS =Net Income available to common stock holders÷ Weighted Average Number of Shares

294530/292900

1.01

Simple Capital structure is the capital structute of an entity where only common stock exist. If the company has some securities with the dilutive nature. the capital structure becomes complex as it increases the weighted average number of shares of the company.

For an entiry/ corporation it is possible to have simple capital structure in one fiscal year and complex capital structure in another fiascal year. to understand this, let us take an example.

Suppose, a corporation has a common stock of 10000 shares in 2019. In 2020, it issues 5000 Employee's Stock options. Stock option is a form of compensation which allows the employees to purchase shares fo the comapny/corporation at a specified price. It this situation, the capital structure becomes complex as the share options are treated as dilutive security.