QUESTIONS 45 THROUGH 68 RELATE TO FINANCIAL STATEMENT ANALYSIS

64. Assume U.S. GAAP (generally accepted accounting principles) applies unless

otherwise noted.

An analyst gathers the following information about a company:

Average market price per share of common stock during the year $40

Exercise price per share for options on 50,000 common shares $50

Exercise price per share for warrants on 20,000 common shares $30

Using the treasury stock method, the number of incremental shares used to

compute diluted earnings per share is closest to:

A. 5,000.

B. 15,000.

C. 20,000.