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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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Jones Company has adopted a traditional share option plan for its officers and other employees. This plan is properly considered a compensatory plan.

Required:

Explain how this plan will affect diluted earnings per share.

To determine

State the manner by which traditional share option plan will have an effect on the diluted earnings per share.

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 diluted earnings per share are computed by dividing the net earnings with adjusted number of shares. Whereas, the weighted average number of common shares is adjusted for the assumption ...

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