CLASS / COURSE: Accounting
An entity that reports a discontinued operation or an extraordinary item shall present basic and diluted earnings per share amounts for those line items
either on the face of the income statement or in the notes to the financial statements.
only in the notes to the financial statements.
only on the face of the income statement.
only if management chooses to do so as these amounts are not required to be disclosed either in the financial statements or the notes thereto.
At December 31, 2014 and 2013, Rollins Corp. had 200,000 shares of common stock and 20,000 shares of 5 percent, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2013 or 2014. Net income for 2014 was $1,000,000. For 2014, basic earnings per common share amounted to
At December 31, 2014, the Carboneer Company had 150,000 shares of common stock issued and outstanding. On April 1, 2015, an additional 30,000 shares of common stock were issued. Carboneer's net income for the year ended December 31, 2015, was $517,500. During 2015, Carboneer declared and paid $300,000 in cash dividends on its nonconvertible preferred stock. The basic earnings per common share, rounded to the nearest penny, for the year ended December 31, 2015, should be
Basic earnings per share represents the amount of earnings attributable to
all common stock and dilutive securities.
common stock, preferred stock, and all dilutive securities.
each share of common stock, and options or warrants which convert to common stock.
each share of common stock outstanding, and any non-conditional conversions and exercises.
Earnings per share disclosures are required only for
companies with complex capital structures.
companies that change their capital structures during the reporting period.
Earnings per share information should be reported for all of the following except
cash flows from operating activities.
For purposes of computing the weighted-average number of shares outstanding during the year, a midyear event that must be treated as occurring at the beginning of the year is the
declaration and issuance of a stock dividend.
purchase of treasury stock.
sale of additional common stock.
issuance of stock warrants.
Leshner Corporation began business on January 1, 2014. Due to difficulties in beginning operations, the company issued 50 shares of common stock (par $10) on January 1, 2014, to the organizers. Twenty additional shares were also sold on that date. The following also occurred during the year 2014:
February 1 2-for-1 stock split
April 1 10 percent stock dividend
August 1 5-for-1 stock split
December 1 1-for-2 reverse stock split
The weighted average number of shares outstanding for 2014 was
The main purpose of reporting diluted earnings per share is to
provide a comparison figure for debt holders.
indicate earnings shareholders will receive in future periods.
distinguish between companies with a complex capital structure and companies with a simple capital structure.
show the maximum possible dilution of earnings.
Under current GAAP, a company with a complex capital structure and potential earnings per share dilution must present
basic and diluted earnings per share.
primary and fully diluted earnings per share.
basic and primary earnings per share.
basic earnings per share and cash flow per share.
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SUBJECTS / CATEGORIES:
2. Financial Management