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Fully vested incentive stock options exercisable at $50 per share to obtain 24,000 shares of common stock were outstanding during a period when the average market price of the common stock was $60 and the ending market price was $60. What will be the net increase in the weighted-average number of shares outstanding due to the assumed exercise of these options when calculating diluted earnings per share?

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haseebkhuhro256

Answer:

Explanation:

As per IAS-33 earning per share, for the calculation of diluted earning per share in case of the options we will add the shares in the weighted average number of shares which will be issued free of cost due to excercise of the option as calculated below:

price of the share  24000*60        =   1440000

Ex.price of the share  24000*50   =   1200000

amount of share issued for free on exercise of stock options  144-120 = 240,000

No of shares issued free = 240000/60 = 4000

these 4000 shares will be the net increase in the w.avg no of shares for the diluted Earning per share.

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