000.EXPLANATIONTHE JANUARY 1 BALANCE IS ADJUSTED RETROACTIVELY FOR...

250,000.ExplanationThe January 1 balance is adjusted retroactively for the reverse stock split and 320,000 / 2 = 160,000 shares are treated asoutstanding from January 1. Issuance of stock is included from the date of issuance. The weighted average shares are computedby multiplying the share amounts by the number of months the shares were outstanding, then adding these amounts and dividingthe sum by 12.January 1: initial shares 160,000 × 12 = 1,920,000July 1: Smith acquisition 60,000 × 6 = 360,000October 1: cash issuance 30,000 × 3 = 90,000Total: 2,370,000Oregon's weighted average shares = 2,370,000 / 12 = 197,500.

Question #85 of 90

Question ID: 414215

Moulding Company's net income was $13,820,000 with 2,600,000 shares outstanding. The average share price for the year was$58.00. Moulding had 10,000 options to purchase 10 shares each at $40 per share outstanding the entire year. MouldingCompany's diluted earnings per share are closest to:ض A)$5.25.غ B)$5.32.غ C)$3.71.Moulding's basic EPS (net income / weighted average common shares outstanding) was $13,820,000 / 2,600,000 = $5.32.Using the treasury stock method to compute diluted EPS, if the options were exercised, cash inflow would be 10,000 × 10 × $40= $4,000,000. Based on the average share price of $58.00, the number of Moulding shares that can be purchased with the cashflow is $4,000,000 / $58 = 68,966. The number of shares that would have been created is 100,000 - 68,966 = 31,034. DilutedEPS was $13,820,000 / (2,600,000 + 31,034) = $5.25.

Question #86 of 90

Question ID: 414087

The "All Faiths" church is building a new church for $2 million on land acquired several years ago. The contractor estimates thecost at $1.3 million and the project is to be completed over a 2-year period with the payments split evenly between the 2 years.During the first year, the total costs incurred were $700,000. During the second year the contractor experienced cost overrunsand costs incurred were $1.0 million. Using the percentage-of-completion method, how much revenue and income should thecontractor recognize in the second year of the project?Revenue Incomeغ A)$1,076,923 $376,923$1,000,000 $0ض C)$923,077 -$76,923During the first year, the revenue was 700,000 / 1,300,000 × 2,000,000 = 1,076,923The total revenue for both years = $2,000,000The second year revenue was 2,000,000 - 1,076,923 = $923,077The second year income = revenues − costs = 923,077 - 1,000,000 = $-76,923

Question #87 of 90

Question ID: 414102

To be classified as an extraordinary item on the income statement under U.S. GAAP, the item must be:estimated and probable.ض B)unusual in nature and infrequent in occurrence.probable and infrequent in nature.Extraordinary items are unusual and infrequent events that are reported separately, net of tax "below the line." Examples areexpropriations by foreign governments and uninsured losses from earthquakes, eruptions, and tornadoes.

Question #88 of 90

Question ID: 414101

Extraordinary items are:related to the normal course of business.unusual in nature and infrequent.unusual in nature or infrequent.Extraordinary items are unusual and infrequent items reported below the line net of taxes. "Below the line" means after net income fromcontinuing operations but before net income.- Discontinued operations are reported below the line net of taxes. - Unusual or infrequent items are unusual or infrequent, but not both. They appear (a separate line item) as a component of net incomefrom continuing operations that must be removed if not deemed to be a component of persistent income. They are reported above the linebefore taxes. - Changes in accounting principle are reported below the line net of taxes. - Accounting errors go directly to retained earnings.

Question #89 of 90

Question ID: 414187

In calculating the numerator for diluted earnings per share, the dividends on convertible preferred stock are:added to earnings available to common shareholders without an adjustment for taxes.added to earnings available to common shareholders with an adjustment for taxes.subtracted from earnings available to common shareholders without an adjustment for taxes.Diluted EPS = [(Net income − Preferred dividends) + Convertible preferred dividends + (Convertible debt interest)(1 − t)] /[(Weighted average shares) + (Shares from conversion of conv. pfd shares) + (Shares from conversion of conv. debt) + (Sharesissuable from stock options)]

Question #90 of 90

Question ID: 414197

Orange Company's net income for 2004 was $7,600,000 with 2,000,000 shares outstanding. The average share price in 2004was $55. Orange had 10,000 shares of eight percent $1,000 par value convertible preferred stock outstanding since 2003. Eachpreferred share was convertible into 20 shares of common stock. Orange Company's diluted earnings per share (Diluted EPS)for 2004 is closest to:$3.40.$3.45.$3.80.Orange's basic EPS ((net income - preferred dividends) / weighted average common shares outstanding) is [($7,600,000 −(10,000 × $1,000 × 0.08)] / 2,000,000 = $3.40. To check for dilution, EPS is calculated under the assumption that the convertiblepreferred shares are converted into common shares at the beginning of the year. The preferred dividends paid are added back tothe numerator of the Diluted EPS equation, and the additional common shares are added to the denominator of the equation.Orange's if-converted EPS is $7,600,000 / (2,000,000 + 200,000) = $3.45. Because if-converted EPS is higher than basic EPS,the preferred stock is antidilutive and no adjustment is made to basic EPS.