Earnings per Share Progresso Corporation, one of the new audit clients, has not reported EPS data in its annual reports to stockholders in the past. The president requested that you furnish information about the reporting of EPS data in the current year’s annual report in accordance with GAAP. Required: a) Define the term earnings per share as it applies to corporation with a capitalization structure composed of only one class of common stock. Then explain how EPS should be computed and how the information should be disclosed in the corporation’s financial statements. b) Discuss the treatment, if any, that should be given to each of the following items in computing EPS for financial statement reporting: i. The declaration of current dividends on cumulative preferred stock. ii. The acquisition of some of the corporation’s outstanding common stock during the current fiscal year (The stock was classified as treasury stock). iii. A two-for-one stock split of common stock during the current fiscal year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Earnings per Share
Progresso Corporation, one of the new audit clients, has not reported EPS data in its annual reports to stockholders in the past. The president requested that you furnish information about the reporting of EPS data in the current year’s annual report in accordance with GAAP.
Required:
a) Define the term earnings per share as it applies to corporation with a capitalization structure composed of only one class of common stock. Then explain how EPS should be computed and how the information should be disclosed in the corporation’s financial statements.
b) Discuss the treatment, if any, that should be given to each of the following items in computing EPS for financial statement reporting:
i. The declaration of current dividends on cumulative preferred stock.
ii. The acquisition of some of the corporation’s outstanding common stock
during the current fiscal year (The stock was classified as treasury stock).
iii. A two-for-one stock split of common stock during the current fiscal year.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Auditing Accounting Estimates & Using the Work of Specialists
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education