At December 31, 2017, Spearmint Inc.had 300,000 common shares outstanding (no preferred shares issued).In addition, the corporation had granted 90,000 stock options to certain executives, and which gave them the right to purchase Spearmint's shares at the option price of $37 per share.None of these options have yet been exercised.The average market price of Spaniel's common shares during 2017 was $50.What is the number of shares that should be used in calculating diluted earnings per share for 2017?

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The number of shares used in calculating diluted earnings per share is the sum of the outstanding common shares and the number of shares that would be issued if all stock options were exercised. In this case, the number of shares that would be issued if all stock options were exercised is 90,000. Therefore, the number of shares used in calculating diluted earnings per share is 300,000 + 90,000 = 390,000. However, since the average market price of the common shares during 2017 was $50, which is greater than the option price of $37, the number of shares used in calculating diluted earnings per share is 300,000 + (90,000 x $50/$37) = 323,400.