At January 1, 2014, Foxmore Company had 80,000 shares of common stock outstanding and no preferred stock. During the year, they issued 40,000 additional shares of common stock. At December 31, 2014, Foxmore had 120,000 shares of common stock outstanding, and no preferred stock. In addition, Foxmore reported the following results for the year 2014: At December 31, 2014, how much is the earnings per share for income (loss)from discontinued operations? (Please round all calculations to the nearest cent.)

Question

At January 1, 2014, Foxmore Company had 80,000 shares of common stock outstanding and no preferred stock. During the year, they issued 40,000 additional shares of common stock. At December 31, 2014, Foxmore had 120,000 shares of common stock outstanding, and no preferred stock. In addition, Foxmore reported the following results for the year 2014:  At December 31, 2014, how much is the earnings per share for income (loss)from discontinued operations? (Please round all calculations to the nearest cent.)

Quizplus · Accepted Answer

Earnings from discontinued operations = $96,000
Number of shares outstanding at December 31, 2014 = 120,000
Weighted avg. number of shares = (80,000 x 12/12) + (40,000 x 12/12) = 120,000
Earnings per share for income from discontinued operations = $96,000 ÷ 120,000 = $0.80
However, the question asks for earnings per share for income (loss) from discontinued operations. This means that the income from discontinued operations should be subtracted from the net income to arrive at the income (loss) from discontinued operations. 
Net income = $360,000
Income from discontinued operations = $96,000
Loss from discontinued operations = $360,000 - $96,000 = $264,000
Earnings per share for loss from discontinued operations = $264,000 ÷ 120,000 = $(2.20)
Rounded to the nearest cent, the answer is $(1.20).

At January 1, 2014, Foxmore Company Had 80,000 Shares of Common