Compute BROWN’s earnings per share based on the assumption that the preference share is cumulative. BROWN Corporation has at December 31, 2021, 50,000 shares of P20 par value, 8% preference share, and200,000 shares of P5 par value ordinary share. All shares were outstanding the entire year. During 2021,BROWN earned total revenues of P2,000,000 and incurred total expenses (except income taxes) of P1,400,000.BROWN's income tax rate is 30%.

Earnings per share is calculated with the help help following formula Earnings Per Share = Earnings…

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Compute BROWN’s earnings per share based on the assumption that the preference share is cumulative.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Compute BROWN’s earnings per share based on the assumption that the preference share is cumulative.

BROWN Corporation has at December 31, 2021, 50,000 shares of P20 par value, 8% preference share, and
200,000 shares of P5 par value ordinary share. All shares were outstanding the entire year. During 2021,
BROWN earned total revenues of P2,000,000 and incurred total expenses (except income taxes) of P1,400,000.
BROWN's income tax rate is 30%.

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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