Question

on December 31, 2017, Ainsworth, Inc. had 650 million shares of common stock outstanding. Thirty five million shares of 8%. $100 par value cumulative, nonconvertible preferred stock were sold on January 2 shares of its common stock as treasury stock. Twenty milion treasury shares wer Ainsworth purchased 50 million sold on August 31, Ainsworth issued a 4% common dividend on June 12, 2018 No cash dividends were declared in 2018. For the year ended December 31, 2018, Ainsworth lion, including an after-tax loss from discontinued operations of $550 million. reported a net loss of $215 million, including an after-tax loss from discontinued Required 1, Compute Ainsworth's net loss per share for the year ended December 31. 2018 Compute the per share amount of income or loss from continuing operations for the year ended December 31. 2018 3. Prepare an EPS presentation that would be appropriate to appear on Ainsworth's 2018 and 2017 comparative income statements. Assume EPS was reported in 2017 as $080 based on net income (no discontinued operations) of $520 milion and a weighted- average number of common shares of 650 million. Req 1 and 2Reg3 Compute Ainsworth's net loss per share for the yeer or loss to 2 decimal places. 10).) Show less Numerator inator Req 3 >

Answer 1

1. Computation of net loss per share:

Numerator = Net Loss – $ 215 million; Preferred dividend - $ 280 million ($ 35 million * 100 * 8%)

Denominator = Weighted average shares of common stock outstanding

1/1     650 * 12/12 = 650 * 1.04 =          $ 676

4/30 50 * 8/12      = 33.33 * 1.04 =      ($ 34.67)

8/30   20 * 4/12      =                                  $ 6.67

Weighted Average                                     $ 648

Net Loss per share = -495 / 648 = $ (0.76)

2. Computation of per share amount of amount or loss:

Income from continuing operations                 $ 335

Extraordinary loss, net of tax                              ($ 550)

Net Loss                                                                    ($ 215)

Per share amount of amount or loss = ($ 335 – 280) / 648 = 0.08

3. The 4% stock dividend issued on June12, 2018 must be retroactively applies to 1/1/2017.

Weighted average number of common shares = 650 * 1.04 = 676 million shares

2017 EPS = 520 / 676 = $ 0.77

2018 EPS = - $ 550 / 648 = ($ 0.85)

                                                                                    2017              2018

EPS from continuing operations                         0.08                0.77

Extraordinary Loss, net of tax                             (0.85)                  0