[Solved] Understanding the Impact of Contingent Shares on EPS Calculation

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When calculating earnings per share (EPS) for Sunland in 2025, it’s crucial to understand how contingent shares, such as those from the Novak acquisition, should be treated. The additional 49,400 shares are based on Novak's projected 2026 net income, but since Novak earned $617,000 in 2025, the ques…

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When calculating earnings per share (EPS) for Sunland in 2025, it’s crucial to understand how contingent shares, such as those from the Novak acquisition, should be treated. The additional 49,400 shares are based on Novak's projected 2026 net income, but since Novak earned $617,000 in 2025, the question arises whether these shares should be included in the 2025 EPS calculation. Specifically, should the 49,400 shares be factored into **diluted EPS**, **basic EPS**, or excluded entirely for Sunland’s 2025 financial statements?

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