中级财务会计英文ch11.pptVIP

Dilutive Securities and Earnings Per Share Chapter 11 Learning Objectives Describe the accounting for the issuance, conversion, and retirement of convertible securities. Explain the accounting for convertible preferred stock. Contrast the accounting for stock warrants and for stock warrants issued with other securities. Describe the accounting for stock compensation plans under generally accepted accounting principles. Discuss the controversy involving stock compensation plans. Compute earnings per share in a simple capital structure. Compute earnings per share in a complex capital structure. An earnings measurement that is based on the return on a per share basis rather than the total earnings of a company. Unconditional conversions and exercises -- Commitments that allow unrestricted increases in outstanding common shares to occur at any time Conditional conversions and exercises -- Commitments that allow increases in outstanding common shares at some future date if certain conditions are met EPS applies only to common stock. Calculated as: Net income (after tax) - Preferred dividends* Weighted average outstanding common stock * Current period’s cumulative preferred stock dividends (whether or not declared) and noncumulative preferred stock dividends (only if declared) are subtracted because these represent the preferred stock’s claim to the current earnings. A company had 200,000 shares of $50 par value common stock, 10,000 of 5%, $20 par value cumulative preferred stock, and 30,000 shares of 5%, $10 par value noncumulative preferred stock outstanding during the year. Net income after taxes was $1,500,000. No dividends were declared during the year. EPS would be a. $7.50 b. $7.43 c. $7.45 d. $7.38 A company had 200,000 shares of $50 par value common stock, 10,000 of 5%, $20 par value cumulative preferred stock, and 30,000 shares of 5%, $10 par value noncumulative preferred stock outstanding during the year.