BuyFindarrow_forward

Intermediate Accounting: Reporting...

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

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
1 views

In determining basic earnings per share, dividends on nonconvertible cumulative preferred stock should be:

  1. a. deducted from net income only if declared
  2. b. deducted from net income whether declared or not
  3. c. added back to net income whether declared or not
  4. d. disregarded

To determine

Identify the manner by which nonconvertible cumulative preferred stock is used for ascertaining basic 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).

Justification for the incorrect answer:

Option a:

Corporation having an outstanding noncumulative preferred stock should deduct the dividends only when they are declared during the year for the current period form the net income. Hence, option a is an incorrect answer.

Option c:

Corporation having an outstanding cumulative preferred stock should deduct the dividends, which are declared or not declared during the year for the current period. Hence, option c is an incorrect answer.

Option d:

Dividends on nonconvertible cumulative preferred stock should be regarded while computing the basic earnings per share...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why should policymakers think about incentives?

Essentials of Economics (MindTap Course List)

Changes in sales cause changes in profits. Would the profit change associated with sales changes be larger or s...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

When entering the credit item in a general journal, it should be listed after all debits and indented.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)