1.

chapter19quiz
FXServicesgranted15millionofits$1parcommonsharestoexecutives,subjecttoforfeitureif
employmentisterminatedwithinthreeyears.Thecommonshareshaveamarketpriceof$8pershareon
thegrantdate.Ignoringtaxes,whatistheeffectonearningsintheyearafterthesharesaregrantedto
executives?

A. $0.
B. $15million.
C. $40million.
D. $120million.

2.

Thecompensationassociatedwithrestrictedstockunderastockawardplanis:

A. Thebookvalueofanunrestrictedshareofthesamestocktimesthenumberofshares.
B. Theestimatedfairvalueofashareofsimilarstocktimesthenumberofshares.
C. Allocatedtoexpenseovertheserviceperiodwhichusuallyisthevestingperiod.
D. Thebookvalueofashareofsimilarstocktimesthenumberofshares.

OnJanuary1,2013,MCompanygranted90,000stockoptionstocertainexecutives.Theoptionsare
exercisablenosoonerthanDecember31,2015,andexpireonJanuary1,2019.Eachoptioncanbe
exercisedtoacquireoneshareof$1parcommonstockfor$12.Anoptionpricingmodelestimatesthe
fairvalueoftheoptionstobe$5onthedateofgrant.

3.

4.

WhatamountshouldMrecognizeascompensationexpensefor2013?

A. $30,000.
B. $60,000.
C. $120,000.
D. $150,000.
Ifunexpectedturnoverin2014causedthecompanytoestimatethat10%oftheoptionswouldbe
forfeited,whatamountshouldMrecognizeascompensationexpensefor2014?

A. $30,000.
B. $60,000.
C. $120,000.
D. $150,000.

5.

Underitsexecutivestockoptionplan,NCorporationgrantedoptionsonJanuary1,2013,thatpermit
executivestopurchase15millionofthecompany's$1parcommonshareswithinthenexteightyears,
butnotbeforeDecember31,2015(thevestingdate).Theexercisepriceisthemarketpriceoftheshares
onthedateofgrant,$18pershare.Thefairvalueoftheoptions,estimatedbyanappropriateoption
pricingmodel,is$4peroption.Noforfeituresareanticipated.Ignoringtaxes,whatistheeffecton
earningsintheyearaftertheoptionsaregrantedtoexecutives?

A. $0.
B. $20million.
C. $60million.
D. $90million.

6.

OnJanuary1,2013,RedInc.issuedstockoptionsfor200,000sharestoadivisionmanager.Theoptions
haveanestimatedfairvalueof$6each.Toprovideadditionalincentiveformanagerialachievement,the
optionsarenotexercisableunlessdivisionalrevenueincreasesby6%inthreeyears.Redinitially
estimatesthatitisprobablethegoalwillbeachieved.Ignoringtaxes,whatiscompensationexpensefor
2013?

A. $0.
B. $200,000.
C. $400,000.
D. $1,200,000.

WilsonInc.developedabusinessstrategythatusesstockoptionsasamajorcompensationincentivefor
itstopexecutives.OnJanuary1,2013,20millionoptionsweregranted,eachgivingtheexecutive
owningthemtherighttoacquirefive$1parcommonshares.Theexercisepriceisthemarketpriceon
thegrantdate$10pershare.OptionsvestonJanuary1,2017.Theycannotbeexercisedbeforethat
dateandwillexpireonDecember31,2019.Thefairvalueofthe20millionoptions,estimatedbyan
appropriateoptionpricingmodel,is$40peroption.Ignoreincometax.

7.

OnMarch1,2017,whenthemarketpriceofWilson'sstockwas$14pershare,3millionoftheoptions
wereexercised.Thejournalentrytorecordthiswouldinclude:

A. Adebittopaidincapitalstockoptionsfor$42million.
B. Acredittopaidincapitalexcessofparfor$255million.
C. Acredittocommonstockfor$75million.
D. Allofthesearecorrect.

WallDrugsofferedanincentivestockoptionplantoitsemployees.OnJanuary1,2013,optionswere
grantedfor60,000$1parcommonshares.Theexercisepriceequalsthe$5marketpriceofthecommon
stockonthegrantdate.TheoptionscannotbeexercisedbeforeJanuary1,2016,andexpireDecember
31,2017.Eachoptionhasafairvalueof$1basedonanoptionpricingmodel.

8.

Whichisthecorrectentrytorecordtheexerciseof90%theoptionsonApril15,2016,whenthemarket
priceofthestockwas$8?

A.

B.

C.

D.

WallDrugsofferedanincentivestockoptionplantoitsemployees.OnJanuary1,2013,optionswere
grantedfor60,000$1parcommonshares.Theexercisepriceequalsthe$5marketpriceofthecommon
stockonthegrantdate.TheoptionscannotbeexercisedbeforeJanuary1,2016,andexpireDecember
31,2017.Eachoptionhasafairvalueof$1basedonanoptionpricingmodel.

9.

Whatisthetotalcompensationcostforthisplan?

A. $0.
B. $60,000.
C. $240,000.
D. $300,000.

10. Whichisthecorrectentrytorecordcompensationexpensefortheyear2013?

A.
B.
C.
D.

11. Whatistheentrytorecordtheexpirationof10%oftheoptionsonDecember31,2017?

A.
B.
C.
D.

12. Asimplecapitalstructuremightinclude:

A. Stockrights.
B. Convertiblebonds.
C. Nonconvertiblepreferredstock.
D. Stockpurchasewarrants.

13. Nonconvertiblebondsaffectthecalculationof:

A. Basicearningspershare.
B. Dilutedearningspershare.
C. BothAandB.
D. Noneoftheseiscorrect.

During2013,AngelCorporationhad900,000sharesofcommonstockand50,000sharesof6%preferred
stockoutstanding.Thepreferredstockdoesnothavecumulativeorconvertiblefeatures.Angeldeclared
andpaidcashdividendsof$300,000and$150,000tocommonandpreferredshareholders,respectively,
during2013.
OnJanuary1,2012,Angelissued$2,000,000ofconvertible5%bondsatfacevalue.Each$1,000bond
isconvertibleintofivecommonshares.
Angel'snetincomefortheyearendedDecember31,2013,was$6million.Theincometaxrateis20%.

14. WhatisAngel'sbasicearningspersharefor2013,roundedtothenearestcent?

A. $5.29.
B. $5.57.
C. $6.50.
D. Noneoftheseiscorrect.

15. WhatwillAngelreportasdilutedearningspersharefor2013,roundedtothenearestcent?

A. $6.43.
B. $6.25.
C. $6.22.
D. Noneoftheseiscorrect.

16. Theresultofastocksplitis:

A. Alargernumberofmorevaluableshares.
B. Anincreaseincorporateassets.
C. Anincreaseinshareholders'equity.
D. Alargernumberoflessvaluableshares.

17. Thecalculationofdilutedearningspershareassumesthatstockoptionswereexercisedandthatthe
proceedswereusedtobuytreasurystockat:

A. Theaveragemarketpriceforthereportingperiod.
B. Themarketpriceattheendoftheperiod.
C. Thepurchasepricestatedontheoptions.
D. Thestock'sparvalue.

18. ThefollowinginformationpertainstoJCompany'soutstandingstockfor2013:

WhatisthenumberofsharesJshouldusetocalculate2013basicearningspershare?

A. 20,000.
B. 22,500.
C. 25,000.
D. 27,000.

During2013,FalwellInc.had500,000sharesofcommonstockand50,000sharesof6%cumulative
preferredstockoutstanding.Thepreferredstockhasaparvalueof$100pershare.Falwelldidnot
declareorpayanydividendsduring2013.

Falwell'snetincomefortheyearendedDecember31,2013,was$2.5million.Theincometaxrateis
40%.Falwellgranted10,000stockoptionstoitsexecutivesonJanuary1ofthisyear.Eachoptiongives
itsholdertherighttobuy20sharesofcommonstockatanexercisepriceof$29pershare.Theoptions
vestafteroneyear.Themarketpriceofthecommonstockaveraged$30pershareduring2013.

19. WhatisFalwell'sbasicearningspersharefor2013,roundedtothenearestcent?

A. $3.14.
B. $4.40.
C. $5.00.
D. Noneoftheseiscorrect.

20. WhatisFalwell'sdilutedearningspersharefor2013,roundedtothenearestcent?

A. $3.14.
B. $4.90.
C. $4.34.
D. Cannotdeterminefromthegiveninformation.

1.

chapter19quizKey

FXServicesgranted15millionofits$1parcommonsharestoexecutives,subjecttoforfeitureif
employmentisterminatedwithinthreeyears.Thecommonshareshaveamarketpriceof$8pershare
onthegrantdate.Ignoringtaxes,whatistheeffectonearningsintheyearafterthesharesaregranted
toexecutives?

A. $0.
B. $15million.
C. $40million.
D. $120million.

The$120milliontotalcompensationisexpensedequallyoverthethreeyearvestingperiod,reducing
earningsby$40millioneachyear.

2.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:1Easy
LearningObjective:1901Explainandimplementtheaccountingforstockawardplans.
SpicelandChapter19#11
Topic:Stockawardplans

Thecompensationassociatedwithrestrictedstockunderastockawardplanis:

A. Thebookvalueofanunrestrictedshareofthesamestocktimesthenumberofshares.
B. Theestimatedfairvalueofashareofsimilarstocktimesthenumberofshares.
C. Allocatedtoexpenseovertheserviceperiodwhichusuallyisthevestingperiod.
D. Thebookvalueofashareofsimilarstocktimesthenumberofshares.

AACSB:ReflectiveThinking
AICPAFN:Measurement
Blooms:Remember
Difficulty:1Easy
LearningObjective:1901Explainandimplementtheaccountingforstockawardplans.
SpicelandChapter19#12
Topic:Stockawardplans

OnJanuary1,2013,MCompanygranted90,000stockoptionstocertainexecutives.Theoptionsare
exercisablenosoonerthanDecember31,2015,andexpireonJanuary1,2019.Eachoptioncanbe
exercisedtoacquireoneshareof$1parcommonstockfor$12.Anoptionpricingmodelestimates
thefairvalueoftheoptionstobe$5onthedateofgrant.

SpicelandChapter19

3.

WhatamountshouldMrecognizeascompensationexpensefor2013?

A. $30,000.
B. $60,000.
C. $120,000.
D. $150,000.
(90,0005=$450,000;$450,000/3yrs.=$150,000)

4.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:1Easy
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#14
Topic:Stockoptionplans

Ifunexpectedturnoverin2014causedthecompanytoestimatethat10%oftheoptionswouldbe
forfeited,whatamountshouldMrecognizeascompensationexpensefor2014?

A. $30,000.
B. $60,000.
C. $120,000.
D. $150,000.
(90,0005=$450,000;$450,00090%=$405,0002/3=$270,000;$270,000150,000=
$120,000)

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:2Medium
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#15
Topic:Stockoptionplans

5.

Underitsexecutivestockoptionplan,NCorporationgrantedoptionsonJanuary1,2013,thatpermit
executivestopurchase15millionofthecompany's$1parcommonshareswithinthenexteightyears,
butnotbeforeDecember31,2015(thevestingdate).Theexercisepriceisthemarketpriceofthe
sharesonthedateofgrant,$18pershare.Thefairvalueoftheoptions,estimatedbyanappropriate
optionpricingmodel,is$4peroption.Noforfeituresareanticipated.Ignoringtaxes,whatisthe
effectonearningsintheyearaftertheoptionsaregrantedtoexecutives?

A. $0.
B. $20million.
C. $60million.
D. $90million.

The$60milliontotalcompensationisexpensedequallyoverthethreeyearvestingperiod,reducing
earningsby$20millioneachyear.
AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:1Easy
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#16
Topic:Stockoptionplans

6.

OnJanuary1,2013,RedInc.issuedstockoptionsfor200,000sharestoadivisionmanager.The
optionshaveanestimatedfairvalueof$6each.Toprovideadditionalincentiveformanagerial
achievement,theoptionsarenotexercisableunlessdivisionalrevenueincreasesby6%inthreeyears.
Redinitiallyestimatesthatitisprobablethegoalwillbeachieved.Ignoringtaxes,whatis
compensationexpensefor2013?

A. $0.
B. $200,000.
C. $400,000.
D. $1,200,000.
Theestimateofthetotalcompensationwouldbe:
200,000$6=$1,200,000
Onethirdofthatamount,or$400,000,willberecordedineachofthethreeyears.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:2Medium
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#20
Topic:Stockoptionplans:performanceormarketconditions

WilsonInc.developedabusinessstrategythatusesstockoptionsasamajorcompensationincentive
foritstopexecutives.OnJanuary1,2013,20millionoptionsweregranted,eachgivingtheexecutive
owningthemtherighttoacquirefive$1parcommonshares.Theexercisepriceisthemarketpriceon
thegrantdate$10pershare.OptionsvestonJanuary1,2017.Theycannotbeexercisedbeforethat
dateandwillexpireonDecember31,2019.Thefairvalueofthe20millionoptions,estimatedbyan
appropriateoptionpricingmodel,is$40peroption.Ignoreincometax.
SpicelandChapter19

7.

OnMarch1,2017,whenthemarketpriceofWilson'sstockwas$14pershare,3millionofthe
optionswereexercised.Thejournalentrytorecordthiswouldinclude:

A. Adebittopaidincapitalstockoptionsfor$42million.
B. Acredittopaidincapitalexcessofparfor$255million.
C. Acredittocommonstockfor$75million.
D. Allofthesearecorrect.
Thecomputationisasfollows:
Cash:3millionoptions5shares/option$10/share=$150million
Paidincapitalstockoptions:3millionoptions$40/option)=$120million
Commonstock:15millionshares$1par/share=$15million
Paidincapitalinexcessofpar(tobalance)=$255million

AACSB:Analytic
AICPAFN:Measurement
Blooms:Analyze
Difficulty:3Hard
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#33
Topic:Stockoptionplans

WallDrugsofferedanincentivestockoptionplantoitsemployees.OnJanuary1,2013,optionswere
grantedfor60,000$1parcommonshares.Theexercisepriceequalsthe$5marketpriceofthe
commonstockonthegrantdate.TheoptionscannotbeexercisedbeforeJanuary1,2016,andexpire
December31,2017.Eachoptionhasafairvalueof$1basedonanoptionpricingmodel.

SpicelandChapter19

8.

Whichisthecorrectentrytorecordtheexerciseof90%theoptionsonApril15,2016,whenthe
marketpriceofthestockwas$8?

A.

B.

C.

D.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Analyze
Difficulty:3Hard
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#39
Topic:Stockoptionplans

WallDrugsofferedanincentivestockoptionplantoitsemployees.OnJanuary1,2013,optionswere
grantedfor60,000$1parcommonshares.Theexercisepriceequalsthe$5marketpriceofthe
commonstockonthegrantdate.TheoptionscannotbeexercisedbeforeJanuary1,2016,andexpire
December31,2017.Eachoptionhasafairvalueof$1basedonanoptionpricingmodel.

SpicelandChapter19

9.

Whatisthetotalcompensationcostforthisplan?

A. $0.
B. $60,000.
C. $240,000.
D. $300,000.
60,000$1=$60,000

10.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:1Easy
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#37
Topic:Stockoptionplans

Whichisthecorrectentrytorecordcompensationexpensefortheyear2013?

A.
B.
C.
D.
(60,000$1)/3=$20,000

AACSB:Analytic
AICPAFN:Measurement
Blooms:Analyze
Difficulty:2Medium
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#38
Topic:Stockoptionplans

11.

Whatistheentrytorecordtheexpirationof10%oftheoptionsonDecember31,2017?

A.
B.
C.
D.

60,000$110%=$6,000
Whenunexercisedoptionsexpire,thepaidincapitalisrenamed.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Analyze
Difficulty:2Medium
LearningObjective:1902Explainandimplementtheaccountingforstockoptions.
SpicelandChapter19#40
Topic:Stockoptionplans

12.

Asimplecapitalstructuremightinclude:

A. Stockrights.
B. Convertiblebonds.
C. Nonconvertiblepreferredstock.
D. Stockpurchasewarrants.

AACSB:ReflectiveThinking
AICPABB:Resourcemanagement
Blooms:Understand
Difficulty:1Easy
LearningObjective:1904Distinguishbetweenasimpleandacomplexcapitalstructure.
SpicelandChapter19#48
Topic:Capitalstructure

13.

Nonconvertiblebondsaffectthecalculationof:

A. Basicearningspershare.
B. Dilutedearningspershare.
C. BothAandB.
D. Noneoftheseiscorrect.
AACSB:ReflectiveThinking
AICPAFN:Measurement
Blooms:Remember
Difficulty:2Medium
LearningObjective:1904Distinguishbetweenasimpleandacomplexcapitalstructure.
SpicelandChapter19#52
Topic:Capitalstructure

During2013,AngelCorporationhad900,000sharesofcommonstockand50,000sharesof6%
preferredstockoutstanding.Thepreferredstockdoesnothavecumulativeorconvertiblefeatures.
Angeldeclaredandpaidcashdividendsof$300,000and$150,000tocommonandpreferred
shareholders,respectively,during2013.
OnJanuary1,2012,Angelissued$2,000,000ofconvertible5%bondsatfacevalue.Each$1,000
bondisconvertibleintofivecommonshares.

Angel'snetincomefortheyearendedDecember31,2013,was$6million.Theincometaxrateis
20%.
SpicelandChapter19

14.

WhatisAngel'sbasicearningspersharefor2013,roundedtothenearestcent?

A. $5.29.
B. $5.57.
C. $6.50.
D. Noneoftheseiscorrect.
ThebasicEPSis$6.50.
Thecomputationisasfollows:

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:2Medium
LearningObjective:1904Distinguishbetweenasimpleandacomplexcapitalstructure.
LearningObjective:1907DescribehowpreferreddividendsaffectthecalculationofEPS.
SpicelandChapter19#53
Topic:BasicEPS
Topic:Earningsavailabletocommonshareholders

15.

WhatwillAngelreportasdilutedearningspersharefor2013,roundedtothenearestcent?

A. $6.43.
B. $6.25.
C. $6.22.
D. Noneoftheseiscorrect.

*(2,000,0005%)=$100,000ininterest;$100,00020%=$20,000intaxsavings
So,aftertaxinterestcost=$80,000.
**BecausethisincreasesEPS,itisantidilutive.Only$6.50basicEPSwillbereported.

16.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:3Hard
LearningObjective:1910Determinewhetherpotentialcommonsharesareantidilutive.
SpicelandChapter19#54
Topic:Antidilutivesecurities

Theresultofastocksplitis:

A. Alargernumberofmorevaluableshares.
B. Anincreaseincorporateassets.
C. Anincreaseinshareholders'equity.
D. Alargernumberoflessvaluableshares.

17.

AACSB:ReflectiveThinking
AICPAFN:Measurement
Blooms:Remember
Difficulty:1Easy
LearningObjective:1906DifferentiatetheeffectonEPSofthesaleofnewshares;astockdividendorstocksplit;andthereacquisitionofshares.
SpicelandChapter19#61
Topic:BasicEPS:stockdividends,stocksplits,reacquiredshares

Thecalculationofdilutedearningspershareassumesthatstockoptionswereexercisedandthatthe
proceedswereusedtobuytreasurystockat:

A. Theaveragemarketpriceforthereportingperiod.
B. Themarketpriceattheendoftheperiod.
C. Thepurchasepricestatedontheoptions.
D. Thestock'sparvalue.

AACSB:ReflectiveThinking
AICPAFN:Measurement
Blooms:Remember
Difficulty:1Easy
LearningObjective:1908Describehowoptions;rights;andwarrantsareincorporatedinthecalculationofEPS.
SpicelandChapter19#64
Topic:DilutedEPS:options,warrants,rights

18.

ThefollowinginformationpertainstoJCompany'soutstandingstockfor2013:

WhatisthenumberofsharesJshouldusetocalculate2013basicearningspershare?

A. 20,000.
B. 22,500.
C. 25,000.
D. 27,000.
Thekeypointisthatthestocksplitisretroactivetothebeginningoftheyear.
10,000(2.0)+5,000(6/12)=22,500

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:2Medium
LearningObjective:1905Describewhatismeantbytheweightedaveragenumberofcommonshares.
LearningObjective:1906DifferentiatetheeffectonEPSofthesaleofnewshares;astockdividendorstocksplit;andthereacquisitionofshares.
SpicelandChapter19#67
Topic:BasicEPS:newshares
Topic:BasicEPS:stockdividends,stocksplits,reacquiredshares
Topic:Weightedaverageshares

During2013,FalwellInc.had500,000sharesofcommonstockand50,000sharesof6%cumulative
preferredstockoutstanding.Thepreferredstockhasaparvalueof$100pershare.Falwelldidnot
declareorpayanydividendsduring2013.
Falwell'snetincomefortheyearendedDecember31,2013,was$2.5million.Theincometaxrateis
40%.Falwellgranted10,000stockoptionstoitsexecutivesonJanuary1ofthisyear.Eachoption
givesitsholdertherighttobuy20sharesofcommonstockatanexercisepriceof$29pershare.The
optionsvestafteroneyear.Themarketpriceofthecommonstockaveraged$30pershareduring
2013.

SpicelandChapter19

19.

WhatisFalwell'sbasicearningspersharefor2013,roundedtothenearestcent?

A. $3.14.
B. $4.40.
C. $5.00.
D. Noneoftheseiscorrect.

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:2Medium
LearningObjective:1907DescribehowpreferreddividendsaffectthecalculationofEPS.
SpicelandChapter19#74
Topic:BasicEPS
Topic:Earningsavailabletocommonshareholders

20.

WhatisFalwell'sdilutedearningspersharefor2013,roundedtothenearestcent?

A. $3.14.
B. $4.90.
C. $4.34.
D. Cannotdeterminefromthegiveninformation.
Thecomputation($in000s)isasfollows:

*10,000options20shares/option=200,000shares;
Proceeds=200,000$29=$5,800,000
$5,800,000/$30pershare=193,333sharesoftreasurystock
Netsharesadded=200,000193,333=6,667

AACSB:Analytic
AICPAFN:Measurement
Blooms:Apply
Difficulty:3Hard
LearningObjective:1907DescribehowpreferreddividendsaffectthecalculationofEPS.
LearningObjective:1908Describehowoptions;rights;andwarrantsareincorporatedinthecalculationofEPS.
SpicelandChapter19#75
Topic:DilutedEPS:options,warrants,rights
Topic:Earningsavailabletocommonshareholders

chapter19quizSummary

Category

#ofQuestio
ns

AACSB:Analytic

15

AACSB:ReflectiveThinking

AICPABB:Resourcemanagement

AICPAFN:Measurement

19

Blooms:Analyze

Blooms:Apply

11

Blooms:Remember

Blooms:Understand

Difficulty:1Easy

Difficulty:2Medium

Difficulty:3Hard

LearningObjective:1901Explainandimplementtheaccountingforstockawardplans.

LearningObjective:1902Explainandimplementtheaccountingforstockoptions.

LearningObjective:1904Distinguishbetweenasimpleandacomplexcapitalstructure.

LearningObjective:1905Describewhatismeantbytheweightedaveragenumberofcommonshares.

LearningObjective:1906DifferentiatetheeffectonEPSofthesaleofnewshares;astockdividendorstocksplit;andthereacqui
sitionofshares.

LearningObjective:1907DescribehowpreferreddividendsaffectthecalculationofEPS.

LearningObjective:1908Describehowoptions;rights;andwarrantsareincorporatedinthecalculationofEPS.

LearningObjective:1910Determinewhetherpotentialcommonsharesareantidilutive.

SpicelandChapter19

26

Topic:Antidilutivesecurities

Topic:BasicEPS

Topic:BasicEPS:newshares

Topic:BasicEPS:stockdividends,stocksplits,reacquiredshares

Topic:Capitalstructure

Topic:DilutedEPS:options,warrants,rights

Topic:Earningsavailabletocommonshareholders

Topic:Stockawardplans

Topic:Stockoptionplans

Topic:Stockoptionplans:performanceormarketconditions

Topic:Weightedaverageshares