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B. Keith Industries, which is having a very successful year, suggests to the Board of Directors that it issue a dividend to the stockholders. In

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B. Keith Industries, which is having a very successful year, suggests to the Board of Directors that it issue a dividend to the stockholders. In the discussion with management, the members of the Board of Directors conclude that, in order to conserve cash for plant expansion, they will declare a 3 percent stock dividend in December of the current year to be distributed early next year. As a result of this decision, the CFO of Keith Industries, in preparing the financial statements, questions whether the stock dividend should be used in calculating the weighted average number of shares outstanding in the determination of EPS for the current year, since the dividend will not be distributed until next year. The CFO turns to you for advice. Required: Determine the appropriate handling of the stock dividend in calculating EPS. Cite specific authoritative references to defend your answ swer.( Please give FASB citation)

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