B is corrent. Common shares outstanding at the beginning of the year were 100,000, and 10,000 shares were issued as a stock dividend. The stock dividend is a retroactive adjustment for EPS calculations; all 110,000 shares are treated as being outstanding for the entire year. The stock options are dilutive because the exercise price of $20 per share was less than the average market price, and the treasury stock method is used to determine the number of incremental shares in computing DEPS.
A is incorrect. Common shares outstanding at the beginning of the year were 100,000, and 10,000 shares were issued as a stock dividend. The stock dividend is a retroactive adjustment for EPS calculations; all 110,000 shares are treated as being outstanding for the entire year. The stock options are dilutive because the exercise price of $20 per share was less than the average market price, and the treasury stock method is used to determine the number of incremental shares in computing DEPS.
A is incorrect. Common shares outstanding at the beginning of the year were 100,000, and 10,000 shares were issued as a stock dividend. The stock dividend is a retroactive adjustment for EPS calculations; all 110,000 shares are treated as being outstanding for the entire year. The stock options are dilutive because the exercise price of $20 per share was less than the average market price, and the treasury stock method is used to determine the number of incremental shares in computing DEPS.
A is incorrect. Common shares outstanding at the beginning of the year were 100,000, and 10,000 shares were issued as a stock dividend. The stock dividend is a retroactive adjustment for EPS calculations; all 110,000 shares are treated as being outstanding for the entire year. The stock options are dilutive because the exercise price of $20 per share was less than the average market price, and the treasury stock method is used to determine the number of incremental shares in computing DEPS.
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