An analyst gathered the following data about a company: The company had 1 million shares of common stock outstanding for the entire year. The company’s beginning stock price was $ 50, its ending price was $ 70, and its average price is $ 60. The company has 100000 warrants outstanding for the entire year. Each warrant allowed the holder to buy one share of common stock at $ 50 per share. How many shares of common stock should the company use in computing its diluted earnings per share（）
A. 1100000.
B. 1016667.
C. 1083333.
参考答案：B
解析：
Use the Treasury stock method:
Step 1: Determine the number of common shares created if the warrants are exercised=100000.
Step 2: Calculate the cash inflow if the warrants are exercised: 100000×$50 per share=$ 5000000.
Step 3: Calculate the number of shares that can be purchased with these funds using the average market price ($ 60 per share): 5000000/60=83333 shares.
Step 4: Calculate the net increase in common shares outstanding from the exercise of the warrants: 100000-83333=16667.
Step 5: Add the net increase in common shares from the exercise of the warrants to the number of common shares outstanding for the entire year: 1000000+16667=1016667.