ACC – 309 INTERMEDIATE ACCOUNTING III MOD 4 Read Chapter 19: Share-Based Compensation and Earnings Per Share In calculating EPS, preferred stock dividends are subtracted form the numerator because EPS represents earnings available to __________ shareholders. Common Which of the following would prevent Norbert Company from having a simple capital structure for the purpose of reporting EPS? Convertible preferred stocks Basic EPS is determined by dividing Earnings available to common shareholders by weighted-average common shares outstanding. Salt Company reports net income of $360 million for 2017; the company’s tax rate is 40%. Throughout the year, 200 million common shares were outstanding. Salt’s basic eps will be $1.80 ($360/200) At the beginning of the year, Solen Corp. had 100,000 shares of common stock outstanding. On April 1, the company issued an additional 60,000 shares. Weighted-average shares for the year will be 145,000 shares (100,000 + (60,000 x 9/12)) Which of the following will result in the distribution of additional shares? Stock dividends / stock splits Salt Company reports net income of #360 million for 2017; the company’s tax rate is 40%. At the beginning of the year, 200 million common shares were outstanding. On July 1, Salt sold an additional 80 million shares and on October 1 distributed a 10% stock dividend. On December, the company reacquired 24 million of its outstanding shares. The company’s weighted-average shares for the purpose of calculating basic EPS will be 262 million [(200 + [80 x 6/12]) x 1.1] – 24/12 Pfeffer Company reports net income of $360 million for 2017; the company’s tax rate is 40%. At the beginning of the year, 200,000 common shares were outstanding. On August 1, the company issued an additional 120,000 shares. Weighted average shares will be 250,000 [200,000 + (120,000 x 5/12)] Which of the following scenarios will increase total assets and equity? The sale of new shares
ACC – 309 INTERMEDIATE ACCOUNTING III MOD 4 Correctly match the type of vesting of stock options with the correct description. Graded vesting – stock options vet over time. Cliff vesting – stock options vest all at once. Which of the following accounting treatments is acceptable for recognizing compensation expense related to stock options that vest over several years (graded vesting options)? Recognize total compensation expense over a weighted-average time period. Which of the following is true under IFRS with respect to the recognition of compensation expense for graded vesting options? The straight-line method is prohibited Which of the following plans frequently specify a performance condition or a market condition that must be satisfied before employees are allowed the benefits of the reward? Stock option plans / other share-based plans What factor typically determines the accounting treatment for share-based plans?