The Following Information Applies to the Next Three Questions

question 26

Multiple Choice

The following information applies to the next three questions:
James Corporation currently has stock rights outstanding for 2,000 common shares. The exercise price of these shares is $20. The options were issued in January of 2009. The average market price of the related common stock during the year 2009 was $25. The average market price of the related common stock during 2010 was $21 and during 2011 was $19. The company's fiscal year ends on December 31 of each year.
How should these stock rights be treated in earnings per share calculations for the year ending December 31, 2009?

• A) The stock options are antidilutive and should not be included either in basic and diluted earnings per share.
• B) The stock options are dilutive and should be included both in basic and diluted earnings per share.
• C) The stock options are dilutive and should be included both in basic and diluted earnings per share in the amount of 400 shares.
• D) The stock options are dilutive and should be included only in diluted earnings per share in the amount of 400 shares.

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Definitions:

Neural Plate

The neural plate is the flat layer of embryonic cells that develops into the neural tube, eventually forming the brain and spinal cord.

Differentiation

The process by which cells or tissues undergo a change toward a more specialized form or function during development.

Development

The process through which organisms grow and change over time, involving physical, biological, and sometimes psychological transformations.

Amnion

The amnion is a thin membrane that surrounds the embryo in mammals, birds, and reptiles, providing a protective environment.