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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What is the weighted average number of shares for computing earnings per share, and how is it calculated?

To determine

Provide the weighted average number of shares while calculating earnings per share and also state the manner by which it is computed.

Explanation

Earnings per share (EPS):

The amount of net income available to each shareholder per common share outstanding is referred to as earnings per share (EPS).

The “weighted average” is equivalent to the number of common shares that are outstanding during the year. Weighted average number of shares is usually determined using the following steps given below:

  • Step 1: Actual number of shares of common shares outstanding at the beginning of the year is multiplied with “layers” of shares that are outstanding it is outstanding until these common shares are reacquired or reissued...

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