Académique Documents
Professionnel Documents
Culture Documents
F:\course\ACCT3322\200720\module4\c19\tnotes\c19b.doc 11/10/2006
548,000
764,800
If in the above example Spencer Company had the following items in the calculation of net
income, the related basic EPS would be presented on the income statement as follows.
Income before extraordinary item
Extraoridinary loss, net of tax
Net income
$400,000
(100,000)
$300,000
$0.52
(0.13)
$0.39
Each item in the income statement is divided by the weighted average number of shares
outstanding, which are 764,800 in this example.
Answer the following questions regarding earnings per share with a simple capital
structure.
Question 1
With respect to the computation of earnings per share, which of the
following would be most indicative of a simple capital structure?
F:\course\ACCT3322\200720\module4\c19\tnotes\c19b.doc 11/10/2006
F:\course\ACCT3322\200720\module4\c19\tnotes\c19b.doc 11/10/2006