Landrover, Inc. had 150,000 shares of common stock issued and outstanding at December 31, 2010. On July 1, 2011, an additional 25,000 shares of common stock were issued for cash. Landrover also had unexercised stock options to purchase 20,000 shares of common stock at $15 per share outstanding at the beginning and end of 2011. The market price of Landrover's common stock was $20 throughout 2011. What number of shares should be used in computing diluted earnings per share for the year ended December 31, 2011?

Question

Quizplus · Accepted Answer

The Answer of Landrover, Inc. had 150,000 shares of common stock issued and outstanding at December 31, 2010. On July 1, 2011, an additional 25,000 shares of common stock were issued for cash. Landrover also had unexercised stock options to purchase 20,000 shares of common stock at $15 per share outstanding at the beginning and end of 2011. The market price of Landrover's common stock was $20 throughout 2011. What number of shares should be used in computing diluted earnings per share for the year ended December 31, 2011?