Question

In: Finance

Problem 19-8 Net loss; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; discontinued operations [LO19-5,...

Problem 19-8 Net loss; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; discontinued operations [LO19-5, 19-6, 19-7, 19-13] On December 31, 2015, Ainsworth, Inc., had 640 million shares of common stock outstanding. Twenty seven million shares of 7%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2016. On April 30, 2016, 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, 2016. No cash dividends were declared in 2016. For the year ended December 31, 2016, Ainsworth reported a net loss of $175 million, including an after-tax loss from discontinued operations of $470 million. Required: 1. Compute Ainsworth's net loss per share for the year ended December 31, 2016. (Round your intermediate calculations to 2 decimal places. Negative amounts should be indicated by a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) 2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2016. (Round your intermediate calculations to 2 decimal places. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2016 and 2015 comparative income statements. Assume EPS was reported in 2015 as $0.80, based on net income (no discontinued operations) of $512 million and a weighted-average number of common shares of 640 million. (Round your answers to 2 decimal places. Loss amounts should be indicated with a minus sign.)

Solutions

Expert Solution

1)Compute Ainsworth's net loss per share for the year ended December 31, 2016.
EPS = (Net Income - Preferred Dividend)/Weighted average # shares of common stock outstanding
Preferred Dividend =[(7% x $100) x 27 million)] $189.00 million
Weighted Average shares Outstanding in Millions Weighted Average shares Outstanding
Date Number of Shares Stock Dividend Total Shares Weights Number of shares x Weights
Jan,1,2016 640 32 672 12/12 672
Jun 1,2016 -30 -1.5 -31.5 8/12 -21
Sep 1,2016 12 4/12 4
Total number of shares 655 shares
Net Loss per Share = (-$175 - 189)/655 -$0.56 per share
2. Compute the per share amount of income or loss from continuing operations for the year ended December 31, 2016
Income from continuing operations ($470 - $175) million $295.00
Extraordinary loss, net of tax -$470.00
Net loss -$175.00
EPS for continuing operations = ($295 - 189)/655 shares $0.16 Per Share
3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2016 and 2015 comparative income statements. Assume EPS was reported in 2015 as $0.80, based on net income (no discontinued operations) of $512 million and a weighted-average number of common shares of 640 million.
The 5% stock dividend issued on June 12, 2016 must be retroactively applied to 1/1/15
Weighted average # shares for 2015: 640 x 1.05 = 672 shares
2015 EPS = $512 ÷ 672 = $0.76
2016 EPS from Extraordinary loss = $470/ 655 $0.72
2016 2015
EPS from continuing operations $0.16 $0.76
Extraordinary loss, net of tax -$0.72 0
EPS -$0.56 $0.76

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Problem 19-8 Net loss; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; discontinued operations [LO19-5,...
Problem 19-8 Net loss; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; discontinued operations [LO19-5, 19-6, 19-7, 19-13] On December 31, 2017, Ainsworth, Inc., had 660 million shares of common stock outstanding. Twenty one million shares of 9%, $100 par value cumulative, nonconvertible preferred stock were sold on January 2, 2018. On April 30, 2018, Ainsworth purchased 30 million shares of its common stock as treasury stock. Twelve million treasury shares were sold on August 31. Ainsworth issued a...
Problem 19-12 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options [LO19-4, 19-5, 19-6,...
Problem 19-12 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-10] On December 31, 2017, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December 15, 2018. On February 28, 2018, Dow sold 60,000 common...
P 19–12 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options LO19–4 through LO19–8,...
P 19–12 EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options LO19–4 through LO19–8, LO19–10 (Note: This is a variation of P19–12, modified to include stock options.) On December 31, 2015, Dow Steel Corporation had 600,000 shares of common stock and 300,000 shares of 8%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 4% common stock dividend on May 15 and paid cash dividends of $400,000 and $75,000 to common and preferred shareholders, respectively, on December...
Exercise 19-17 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options [LO19-5,...
Exercise 19-17 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options [LO19-5, 19-6, 19-7, 19-8] On December 31, 2020, Berclair Inc. had 320 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 72 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold...
Problem 19-18 EPS; stock options; nonconvertible preferred; convertible bonds; shares sold [LO19-4, 19-5, 19-6, 19-7, 19-8,...
Problem 19-18 EPS; stock options; nonconvertible preferred; convertible bonds; shares sold [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9] At January 1, 2018, Canaday Corporation had outstanding the following securities: 720 million common shares 45 million 8% cumulative preferred shares, $50 par 4% convertible bonds, $4,500 million face amount, convertible into 90 million common shares The following additional information is available: On September 1, 2018, Canaday sold 81 million additional shares of common stock. Incentive stock options to purchase 40 million shares...
Problem 19-13 (Algo) EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options; convertible bonds;...
Problem 19-13 (Algo) EPS; nonconvertible preferred stock; treasury shares; shares sold; stock dividend; options; convertible bonds; contingently issuable shares [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9, 19-10, 19-11] On December 31, 2020, Dow Steel Corporation had 770,000 shares of common stock and 317,000 shares of 9%, noncumulative, nonconvertible preferred stock issued and outstanding. Dow issued a 5% common stock dividend on May 15 and paid cash dividends of $570,000 and $86,000 to common and preferred shareholders, respectively, on December 15, 2021....
Exercise 19-19 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible...
Exercise 19-19 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds [LO19-5,19-6, 19-7, 19-8, 19-9] On December 31, 2020, Berclair Inc. had 560 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares...
Exercise 19-19 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible...
Exercise 19-19 (Algo) EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds [LO19-5,19-6, 19-7, 19-8, 19-9] On December 31, 2020, Berclair Inc. had 340 million shares of common stock and 6 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares...
Exercise 19-19 EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds...
Exercise 19-19 EPS; stock dividend; nonconvertible preferred stock; treasury shares; shares sold; stock options; convertible bonds [LO19-5,19-6, 19-7, 19-8, 19-9] On December 31, 2017, Berclair Inc. had 480 million shares of common stock and 5 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were...
Problem 19-17 EPS; options; convertible preferred; additional shares [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9] On January...
Problem 19-17 EPS; options; convertible preferred; additional shares [LO19-4, 19-5, 19-6, 19-7, 19-8, 19-9] On January 1, 2018, Tonge Industries had outstanding 460,000 common shares ($1 par) that originally sold for $25 per share, and 5,000 shares of 10% cumulative preferred stock ($100 par), convertible into 50,000 common shares. On October 1, 2018, Tonge sold and issued an additional 12,000 shares of common stock at $35. At December 31, 2018, there were 21,000 incentive stock options outstanding, issued in 2017,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT