A partial income statement is shown below for Mavis Company.
|
(In thousands) |
2004 |
|
|
Income before extraordinary items and taxes |
$4,523 |
|
|
Provision for income taxes |
1,036 |
|
|
Income before extraordinary items |
$3,487 |
|
|
Extraordinary loss from condemnation of land for a freeway (net of tax benefits of $322) |
644 |
|
|
Net income |
$2,843 |
|
|
Earnings per share |
Basic |
Diluted |
|
Income before extraordinary items |
$1.16 |
$1.00 |
|
Extraordinary items |
0.21 |
0.19 |
|
Net income |
$0.95 |
$0.81 |
(a) Why are earnings per share presented for both before and after the extraordinary items?
(b) On how many shares was Mavis computing basic earnings per share? Diluted earnings per share? (c) What kinds of items might account for the additional shares used for the calculation of diluted earnings per share?