FAR Module 15 EPS

Question 0

EPS for which two items must be on the face of the income statement?

Answer 0

1) inc from cont. operations, net of tax

4) net income

Question 1

You must show EPS for what four things?

Answer 1

1) inc from cont. operations, net of tax
2) discontinued operations, net of tax
3) extraordinary gains/losses, net of tax
4) net income

Question 2

EPS for which two items can be either on the face of the income statement or In the footnotes?

Answer 2

2) discontinued operations, net of tax

3) extraordinary gains/losses, net of tax

Question 3

T/F

The SEC requires that preferred securities redeemable for cash or other assets should be classified outside of permanent equity as temporary equity if the preferred stock is redeemable at a fixed or determinable price on a fixed or determinable date

Answer 3

TRUE

Question 4

T/F

Mandatorily redeemable preferred stock must be classified as liabilities on the balance sheet

Answer 4

TRUE

Question 5

T/F

if a stock dividend provides that the shareholders may receive either cash or stock, the dividend is treated as a share issuance and weighted for the time period outstanding

Answer 5

TRUE

Question 6

T/F

The SEC requires that if preferred stock is redeemed the difference between the fair value of the consideration transferred and the carrying amount of the preferred stock should be treated the same as a dividend to preferred shareholders in calculating earnings-per-share

Answer 6

TRUE

Question 7

What is the formula for basic earnings per-share

Answer 7

Net income - current year preferred stock dividend/ weighted average number of common stock shares outstanding

Question 8

What is the formula for diluted earnings-per-share

Answer 8

Basic EPS + net of tax bond interest expense /

Basic EPS + common stock equivalents

Question 9

What are the two capital structures?

Answer 9

Simple

Complex

Question 10

What is included in a simple capital structure

Answer 10

Regular common stock
Regular preferred stock
Regular bonds payable

Question 11

What is included in a complex capital structure?

Answer 11

Simple + convertible preferred stock, convertible bonds payable, stock warrants, stock options, contingent shares

Question 12

What is the flow chart for dealing with preferred stock?

Answer 12

If cumulative, subtract 1 year: current year

If non cumulative, is it declared? If so subtract 1 year: current year
If non cumulative and non declared, do nothing