FAR 7 & 8 Flashcards
How is diluted earning per share calculated with options/warrants, convertible bonds, and convertible preferred stock?
options/warrants - the avg price must be greater than the exercise/strike price or else they will be antidilutive
if dilutive, take total shares/exercise price per share, then divide it by the avg price per share. you then take the difference between the total c/s shares - the avg repurchased shares and the remaining is the common shares added to common shares detonator.
convertible bonds - use if converted method, which means assume it is dilutive to see. you have to add back the interest exp that was anticipated net of tax to the numerator and add convertible shares of c/s to denominator. if new EPS is lower than basic, than it is dilutive and should be included.
convertible p/s - use if converted method, do not take out preferred dividends and add the new common stock shares, if new EPS is lower than basic, it is dilutive and should be included.
how to calculate book value per share of common stock?
total stock holders equity - liquidation value of preferred stock - dividends in arrears divided by common shares outstanding
If a Benefit plan is underfunded, meaning plan assets are less than PBO or APBO, how are they reported on balance sheet?
it depends, you must see how much plan assets there is available to pay benefits for the next year. if there is not enough that portion is a current liability and the rest is noncurrent
