Question

Concord Corporation had 807000 shares of common stock outstanding at December 31, 2021. In addition, it had 150000 stock options outstanding, which had been granted to certain executives, and which gave them the right to purchase shares of Concord's stock at an option price of $37 per share. The average market price of Concord's common stock for 2021 was $50. What is the number of shares that should be used in computing diluted earnings per share for the year ended December 31, 2021?

Answer 1

Answer:

846,000 shares

Explanation:

According to the scenario, computation of the given data are as follows:

Outstanding common stock = 807,000 shares

Outstanding option stock = 150,000

option price = $37

Market price of common stock = $50

So, 150,000 - (150,000 × $37 ÷ 50)

= 150,000 - 111,000

= 39,000

So, Number of shares = 807,000 + 39,000

= 846,000 shares