Formulas

Question 1

Basic EPS

Answer 1

= Net Income / Weighted Avg # of Shares Outstanding

Question 2

Diluted EPS

Answer 2

= Net Income - Preferred Dividends / Weighted Avg. # of Shares + Dilutive Shares From Convertible Securities

Question 3

Amortization of Lease

Answer 3

= Leasehold Improvement / Remaining Life of Lease

Question 4

Journal wntry for writing Down Inventory

Answer 4

Dr: Loss on Inventory Write-Down
Cr: Inventory

Question 5

Compute dollar-value LIFO

Answer 5

Firm applies a price index to the LIFO inventory layers added

When the price index is greater than 1.0, dollar-value LIFO will be greater than the comparable base-year amounts.

Price Index Formula (find ending inventory)

Price Index = Ending current year cost / Ending base year cost

Layer added = Base Year Cost x Price Index

Question 6

Cost of land

Answer 6

Rule: Cost of land includes all costs necessary to put the land in place and condition for construction of the plant. Any proceeds from the sale of any existing buildings (or standing timber, or soil) or scrap are deducted from the cost of the land.