Question

In 2020, Sandhill Co. reported a discontinued operations loss of $1160000, net of tax. It declared and paid preferred stock dividends of $120000 and common stock dividends of $355000. During 2020, Sandhill had a weighted average of 500000 common shares outstanding. As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by

Answer 1

The correct answer is 2.32.

Step-by-step explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the decrease in earning per share due to loss in disconnected operations by using following formula:-

Decrease in Earning Per Share Due to Loss in Disconnected Operations = Discontinued Operation Loss ÷ Weighted Average Common Share Outstanding

By putting the value, we get

=$1,160,000 ÷ $500,000

= 2.32

Answer 2

$2.32

Step-by-step explanation:

Data provided

Discontinued operations loss = $1,160,000

Common shares outstanding = 500,000

The computation of earnings per share is shown below:-

Decrease in earning per share due to loss in discontinued operations = Discontinued operations loss ÷ common shares outstanding

= $1,160,000 ÷ 500,000

= $2.32

Therefore for computing the decrease earning per share we simply appplied the above formula.