INTERMEDIATE ACCOUNTING ACCESS 540 DAY
INTERMEDIATE ACCOUNTING ACCESS 540 DAY
10th Edition
ISBN: 9781264706327
Author: SPICELAND
Publisher: MCG
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Chapter 19, Problem 19.6Q
To determine

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share.

Use the following formula to determine EPS:

Earnings per share} = Earnings available to common shareholdersWeighted average number of common shares outstandingNet income –Preferred dividendsWeighted average number of common shares outstanding

Stock dividends: Stock dividends are the number of shares issued by a company to the existing shareholders in a proportion equal to the number of shares owned by each shareholder, based on a stock dividend percentage.

Stock splits: Stock split is the increase in number of shares due to splitting or decreasing par value of each share.

To explain: The treatment of stock dividends and stock options while computing weighted average number of common shares, and comparison of treatment of stock dividends and stock options while computing weighted average number of common shares when additional shares are sold

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