
Earnings per share: Earnings per share (EPS) indicates the income earned per share of common stock. EPS is calculated as Basic EPS and Diluted EPS.
The income for EPS is calculated by subtracting the preference dividends. The income is divided by weighted-average common shares outstanding. This is Basic EPS. Basic EPS does not consider the dilutive effects of convertible long-term debts. Diluted EPS is based on the assumption that all convertible securities like
Given information: Net income: $50,000.
Dilutive options: 1,000.
Exercise price: $6.
Shares: 10,000.
Market price: $20.
(a) To compute: To compute diluted EPS (Round to nearest cent).
(b) To compute: To compute average market price during the last 3 months.

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Chapter 16 Solutions
Study Guide Intermediate Accounting, Volume 1: Chapters 1 - 14
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