Describe the accounting for the issuance, conversion, and retirement of. Chapter 16 dilutive securities and earnings per share truefalse dilutive securities conceptual answer no. Share premiumconversion equity 194,384 bonds payable 2,000,000 share capitalordinary 500,000 share premiumordinary 1,694,384 to record the conversion of bonds at maturity. Compute earnings per share in a simple capital structure. Use the treasury stock method to compute diluted eps 4. Chapter 16 dilutive securities and earnings per share optional assignment characteristics table item description be164 issuance of bonds with warrants. This is not textbook click here to download free samples. Study 32 chapter 16 dilutive securities and earnings per share flashcards from olivia s. Dilutive securities and earnings per share multiple choice. Dilutive securities and earnings per share earnings per.
Securities that are not common stock in form, but enable their holders to obtain common stock upon exercise or conversion. Explain the accounting for convertible preference shares. Diluted eps is a performance metric used to gauge the quality of a companys earnings per share eps if all convertible securities were exercised. Chapter 16 dilutive securities and earnings per share flashcards. Use the ifconverted method to compute diluted eps 5. Chapter 16 dilutive securities and earnings per share ifrs questions are available at the end of this chapter. Ch16 kieso intermediate accounting solution manual slideshare. Dilutive securities and earnings per share 16 5 chapter learning objectives 1.
Chapter 16 solution manual finance fin300 neu studocu. Class1416 ch16 notes chapter 16 dilutive securities. Discuss the controversy involving stock compensation plans. A capital structure that includes securities that could have a dilutive effect on earnings per common share. In this topic, we discuss the accounting for these dilutive securities and stockbased compensation plans. Difference between convertible securities and stock warrants is that upon exercise of the warrants, the holder has to pay a certain amount of money to obtain the shares. Dilutive securities and earnings per share checklist of key figures. Solution manual for intermediate accounting ifrs edition. Convertible securities are potentially dilutive securities and part of diluted earnings per share if their conversion.
The effect given preferred dividends in determining income available to common stockholders in computing basic eps. Describe the accounting for the issuance, conversion, and retirement of convertible securities. Chapter 16 dilutive securities and earnings per share true. True in the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed reacquisition of common stock at the average market price during the. Dilutive securities and 16 earnings per share 16 14 convertible preferred stock includes an option for the holder to convert preferred shares into a fixed number of common shares. Chapter 16 dilutive securities and earnings per share key. If the bonds are converted at maturity, roche makes the following entry. Convertible securities are potentially dilutive securities and part of diluted earnings per share if their conversion increases the eps numerator less than it increases. Multiple potentially dilutive securities considered in computing diluted earnings per share 7. Chapter 16 dilutive securities and earnings per share assignment. Convertible securities intermediate accounting cpa. Description weighted average number of common shares outstanding. Recognition of compensation expense in a stock option plan.
Earnings per share based on the number of common shares outstanding plus all contingent issuances of common stock that could reduce earnings per share. Companies with dilutive securities report both basic eps and diluted eps in their income statements. No theoretical justification for recognizing a gain or loss when exercised. Moderate 3035 p167 computation of basic and diluted eps. Ifrs questions are available at the end of this chapter. The reconciliation shall include the individual income and share amount effects of all securities that affect earnings per share eps. The easiest approach to obtaining the most diluted eps involves ranking the securities from most to least dilutive in terms of the savings per common share that would have been achieved if the shares had been issued. Diluted weighted average shares outstanding for the three months ended march 31, 2020, excludes anti dilutive stock options totaling 1,190,000. Upon conversion or exercise by the holder, the dilutive securities reduce dilute earnings per share. For instructor use only 16 11 questions chapter 16 continued. Chapter 16 dilutive securities and earnings per share business acg 31 with lively at university of south florida studyblue. Dilutive securities and eps chapter 16 linkedin slideshare.
Description multiple choice dilutive securities, conceptual. Chapter 16 dilutive securities and earnings per share. Securities such as convertible debt or stock options are dilutive because their features indicate that the holders of the securities can become common shareholders. The number of shares one receives for each bond and the price one pays for those shares are determined when the convertible bond is issued.
Chapter 16 dilutive securities and earnings per share chapter 16. Contrast the accounting for share warrants and share warrants issued with other securities. Problem p1 part 4exercising warrants suggested homework problems for chapter 16 quiz 1 has 10 questions these hw problems cover all the material for that quiz 1. Moderate 1525 p161 entries for various dilutive securities. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Chapter 16 dilutive securities and earnings per share ifrs questions. Moderate p166 eps computation of basic and diluted eps. Read and study chapter 16 dilutive securities and earnings per share submit chapter 15 assignments. The idea is that if a security increases the outstanding shares it will dilute the current shareholders stake in the company as well as their owner benefits like future. Additionally, the impact of dilutive securities and stockbased compensation plans on earnings per share is also discussed in this topic. The actual conversion of convertible securities or the exercise of options, warrants, or rights 6.
Instant download solution manual for intermediate accounting ifrs edition 3rd edition by donald e. Dilutive securities and earnings per share password protected assets. Earnings per share the following table sets forth the computation of basic and diluted earnings per share. When the common shares are issued, there will be a reductiondilutionin earnings per share. In other words, its any securities that can be turned into common stock. When more than two potentially dilutive securities exist, anti dilutive effects can be more difficult to detect. A dilutive security is any type of investment security that has the potential to increase the number of common shares outstanding.
Dilutive securities and earnings per share powerpoint slides. Chapter 16 dilutive securities and earnings per share learning objectives after studying this chapter, you should be able to. Prepared by coby harmon, university of california, santa barbara learning objectives 1. A reconciliation of the numerators and denominators of the basic and diluted per share computations, including individual income and share amount effects of all securities that affect eps. Reporting additional payment to encourage conversion. Truefalse dilutive securities conceptual answer no. Describe the accounting for the issuance, conversion, and retirement of convertible selection from intermediate accounting, 15th edition book. Ch 16 16 dilutive securities and earnings per share. Chapter 16 dilutive securities and earnings per share 16 3 conversion of bonds at maturity. Solutions manual for instructor use only 16 1 chapter 16 dilutive securities and earnings per share assignment classificationtable by topic topics questions brief exercises exercises problems concepts for analysis 1. View notes ch 16 from acct 301 at california state university, fullerton. Classified as part of stockholders equity, unless mandatory redemption exists. Digital copy doc docx pdf rtf in zip file download time. Cumulative convertible preferred stock income adjustment.
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