The 2014 net income of MNO was $300,000, and 100,000 of its common shares were outstanding during the entire year.In addition, outstanding options existed to purchase 10,000 common shares at $10 per share.These options were granted in 2012 and none had been exercised by December 31, 2014.MNO earned interest at 8% and had a 50% tax rate.The amount, which should be shown as MNO's basic earnings per share for 2014, is (rounded to the nearest cent):

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Quizplus · Accepted Answer

Basic earnings per share (EPS) is calculated as net income divided by the weighted average number of common shares outstanding. In this case, net income is $300,000 and there are 100,000 shares outstanding. Therefore, basic EPS = $300,000 / 100,000 = $3.00. The options are not considered in the calculation of basic EPS, only in diluted EPS.

The 2014 Net Income of MNO Was $300,000, and 100,000