Answer:
Basic earnings per share = $1.46
Diluted earnings per share = $1.40
Explanation:
<em>Basic earnings per share = Earnings Attributable to Holders of Common Stock / Weighted Average Number of Common Stockholders</em>
<em>Earnings Attributable to Holders of Common Stock Calculation :</em>
Net income for the year ended December 31 $700,000,000
Less Preference dividend ( 3,000,000 × 9%×$100×5%) ($1,350,000)
Earnings Attributable to Holders of Common Stock $698,650,000
<em>Weighted Average Number of Common Stockholders Calculation :</em>
Common Shares 1 January 2021 460 million
Purchased On March 1, 2021, (10/12×24,000,000) 20 million
Weighted Average Number of Common Stockholders 480 million
Basic earnings per share = $698,650,000/ 480,000,000
= $1.46
<em>Diluted earnings per share = Adjusted Earnings Attributable to Holders of Common Stock /Adjusted Weighted Average Number of Common Stockholders</em>
<em>Adjusted Earnings Attributable to Holders of Common Stock Calculation :</em>
Net income for the year ended December 31 $700,000,000
Less Preference dividend ( 3,000,000 × 9%×$100×5%) ($1,350,000)
Earnings Attributable to Holders of Common Stock $698,650,000
<em>Adjusted Weighted Average Number of Common Stockholders Calculation </em>
Common Shares 1 January 2021 460 million
Purchased On March 1, 2021, (10/12×24,000,000) 20 million
Weighted Average Number of Common Stockholders 480 million
Diluted earnings per share = $698,650,000/ 500,000,000
= $1.40
