(EPS with contigent issuance agreement) Winsor Inc. recently purchased holiday corp., a large Midwestern home painting corporation. One of the terms of the merger was that if Holiday’s income for 2007 was $110,000 or more, 10,000 additional shares would be issued to Holiday’s stockholders in 2008. Holiday’s income for 2006 was $120,000. Hint: (LO7)
- Would the contigent shares have to be considered in Winsor’s 2006 earnings per share computations?
- Assume the same facts, except that the 10,000 shares are contigent on Holiday’s achieving a net income of $130,000 in 2007. Would the contigent shares have to be considered in Winsor’s earning per share computations for 2006?