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:

Fraudulent Practices

Actions intended to deceive others for personal gain or advantage, often violating legal or ethical standards.

Iroquois

A historically powerful and important northeast Native American confederacy, known as the Haudenosaunee, consisting of six nations: the Mohawk, Onondaga, Oneida, Cayuga, Seneca, and Tuscarora tribes.

William Penn

An English Quaker leader and founder of Pennsylvania, a colony established as a place of religious freedom for Quakers and other persecuted religions.

Walking Purchase

A 1737 agreement between the Penn family, the proprietors of Pennsylvania, and the Lenape Indians, which fraudulently expanded Pennsylvania territory by utilizing a forged document.