For the year, Tourny SA has a weighted average number of shares of 3,000,000 units. An agreement entered into before the start of the year (in force 12 months of the year) provides for two tranches of shares to be issued at the end of a two-year contingency period, for little or no consideration: 200,000 units shares if cumulative revenue reaches a target; 100,000 units shares if cumulative operating profit reaches another target. At the end of the first year, cumulative revenue already reaches the target of tranche A; cumulative operating profit does not reach that of tranche B. Calculate the contingent shares to include in diluted earnings, then the number of shares in the diluted denominator (excluding other instruments).
- Weighted average number of ordinary shares
- 3,000,000
- Tranche A shares (revenue)
- 200,000
- Tranche B shares (operating profit)
- 100,000
- Months of the year the agreement was in force
- 12