Answered: In computing Earnings per share when…

In computing Earnings per share when there are preference shares, the total net income after tax is reduced by the dividend in arrears of cumulative preference shares. a. TRUE

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 15GI

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Question

In computing Earnings per share when there are preference shares, the total net income after tax is reduced by the dividend in arrears of cumulative preference shares.

a. TRUE

b. FALSE

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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