Extraordinary income and income before extraordinary income should be reported with an EPS numbe

Contingent shares included inn calculation of basic EPS, But used in calc of diluted of eps..

while calcultaing basic eps.. Pref div should be ded in the year accrued( and how much accrued should
Anti dilution rule--use a particular scenario only if it reduces eps do not use if it increases eps
Stock aplit or stock div have retrospective effect and are taken for the whole year..

I nterest expense ( net of i ncome tax) on debt considered would be

added back to the n u merator for diluted EPS if the effects are dilutive
Preferred dividends reduce the amount of "income" available to common
stockholders.
N e t i n c o m e l e ss p re f e rre d d i v i d e n d s _
We i g h te d s h a re s 0/S
Preferred dividends are not subtracted when computi ng the adjusted net i ncome because
we are maki ng the assumption that the preferred shares were converted to common
shares at the beginning of the period and, thus, that no preferred dividends were paid

All public entities must present earni ngs per share on the face of
the i ncome statement. I n a simple capital structure, basic EPS for i ncome from conti n u i ng
operations and net i ncome are presented. I n a complex capital structure, basic and
diluted EPS must be presented for i ncome from conti n u i ng operations and net i ncome

Cash flow
Cash eq items d o not influence cash flow st they are merely added dto cash..
Primary purpose of st of cash flows is to provide list of cash infloes and outflows..
Decrese in taxes payable- operating activity(desucct)

Supplemental discolosures under indirect method for cash padi for income tax and interest.
Stokc for services--use date of acceptance

Stock split decr ret earnings and no effect on total stockholders equity..
stock split smaller stock %(<20) use fmc larger stock % use par value
Book value per share= c/s+apic+ret ear/ no of sh o/s
Compared to the cost method for reporti ng treasury stock, the par value method will report
a lower amount for additional paid-i n capital (API C) and the same amount for retai ned
earn1 ngs

Decrease stockholders' equity i n total. All treasury stock transactions decrease total
equity.
2. I ncrease book value per share. Book value per share is based on the number of
outstanding common shares, which is reduced by the acquisition of treasury stock
(the denomi nator is reduced)
Allocate issue proceeds of basket purchases based on fv

IN PIC add the apic from preffered stock..

Dividends are not reporteda s a aliability unless dividends are declared..
Cash div--reduces working cap
Retained earnings appropriated restricts earning available to dividends
div recd and trading sec pur--part of cashflow from op(dir emthod)
cash recd from customers
Sales 1,950,000
Less Increase in Accounts Receivable (4,700)
Less Decrease in Deferred Revenue (6,200)
Cash Received from Customers

Cash paid to suppliers:

COGS 1,295,000
Plus Increase in Inventory 21,700
Less Increase in Accounts Payable (14,100)
Cash Paid to Suppliers

No entry is required when stock options are granted. There is

no effect on shareholders equity at
the time of issuance
Record the journal entries to recognize compensation expense for Year 1, Year 2 and Year 3.
December 31, Year 1:
Account
Debit Credit
Compensation expense Stock options 50,000
Additional paid-in capital Stock options 50,000

Record the journal entry and affected financial statements assuming one half of the options were exer
January 1, Year 4
Account
Debit Credit
Cash (25,000 X $30) 750,000
Additional Paid in Capitalstock options 75,000
Common stock (25,000 X $1.00) 25,000

y income should be reported with an EPS number

S, But used in calc of diluted of eps..

the year accrued( and how much accrued should be considered irrespective whether it has been paid or not)

duces eps do not use if it increases eps

are taken for the whole year..

ered would be
ffects are dilutive

ailable to common

ng the adjusted net i ncome because

res were converted to common
o preferred dividends were paid

the face of
basic EPS for i ncome from conti n u i ng
ex capital structure, basic and
n u i ng operations and net i ncome

merely added dto cash..

cash infloes and outflows..

cash padi for income tax and interest.

ckholders equity..

% use par value

tock, the par value method will report

nd the same amount for retai ned

ock transactions decrease total

e is based on the number of

acquisition of treasury stock

nds are declared..

able to dividends

(dir emthod)

expense for Year 1, Year 2 and Year 3.

ents assuming one half of the options were exercised

been paid or not)