On July 5, 2017, Alpha Corp. purchased a call option for $2,400, giving it the...
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On July 5, 2017, Alpha Corp. purchased a call option for $2,400, giving it the right to buy 1,000 shares of Omega Corp. for $40 per share. On Aug 18, 2017, when the option value is $12,000, Omega settles the option for cash. The entry on Alphas books to record the settlement is:
Cash 12,000
Derivatives- Financial Assets/Liabilities 2,400
Gain 9,600
Cash 12,000
Gain 12,000
Cash 12,000
Derivatives Financial Assets/Liabilities 12,000
Derivatives- Financial Assets/Liabilities 2,400
Cash 9,600
Gain 12,000
In calculating diluted earnings per share, the equivalent number of convertible preferred shares is added as an adjustment to the denominator. If the preferred shares are cumulative, which amount should be added as an adjustment to the numerator?
Annual preferred dividend
Annual preferred dividend times (one minus income tax rate)
Annual preferred dividend times the income tax rate
Annual preferred dividend divided by the income tax rate
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