Question
Discuss the treatment, if any, that should be given to each of the following items in computing EPS for financial statement reporting: 1. The exercise
Discuss the treatment, if any, that should be given to each of the following items in computing EPS for financial statement reporting: 1. The exercise at a price below market value but above book value of common stock option issued during the current year to officers of the corporation. 2. The replacement of a machine immediately before the close of the current year at a cost 20 percent above the original cost of the replaced machine (the new machine will perform the same function as the old machine, which was sold for its book value. 3. Outstanding preferred stock issued at a premium with a par value liquidation right. 4. A provision created out of retained earnings for a contingent liability from a possible lawsuit. 5. A two-for-one stock split of common stock during the current fiscal year. 6. The acquisition of some of the corporation's outstanding common stock during the current fiscal year (the stock was classified as treasury stock) 7. The declaration of current dividends on cumulative preferred stock.
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