The Esposito Import Company had 1 million shares of common stock outstanding during 2021. Its income statement reported the following items: income from continuing operations, $11 million; loss from discontinued operations, $2.4 million. All of these amounts are net of tax. Required: Prepare the 2021 EPS presentation for the Esposito Import Company

Question

Lillie Sheppard

Business

19 October, 16:26

The Esposito Import Company had 1 million shares of common stock outstanding during 2021. Its income statement reported the following items: income from continuing operations, $11 million; loss from discontinued operations, $2.4 million. All of these amounts are net of tax. Required: Prepare the 2021 EPS presentation for the Esposito Import Company

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Kimora Joseph · Answer 1

(1) Total Operations

Earnings per share is $ 8.60 or 860 cents

(2) Continuing Operations

Earnings per share is $ 11.00 or 1100 cents

(3) Discontinued Operations

Earnings per share is - $2.40 or - 240 cents

Explanation:

A company that has discontinued operation is required to disclose three (3) Earnings Per Share figures coming from (1) Total Operations (2) Continuing Operations (3) Discontinued Operations. This is important since the position of the ordinary shareholders has to be established before and after discontinuing activities

Earnings per share = Profit Attributable to Ordinary Shareholders / Weighted Average Number of Shares

(1) Total Operations

Earnings per share = ($11 - $2.4) / 1

= $ 8.60 or 860 cents

(2) Continuing Operations

Earnings per share = $11 / 1

= $ 11.00 or 1100 cents

(3) Discontinued Operations

Earnings per share = (-$2.4) / 1

= - $2.40 or - 240 cents