Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 20, Problem 20.4Q
Diluted EPS. If all potentially dilutive securities are dilutive (as opposed to antidilutive), will diluted earnings per share be the same whether there are actual or hypothetical conversions of potentially dilutive securities?
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distinguish between dilutive and antidilutive securities, and describe the implications of each for the earnings per share calculation
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Does the if-converted assumption apply only to diluted earnings per share?
O A. The if-converted assumption is always applied to diluted EPS, as long as the results are not antidilutive. However, this assumption
is also applied to basic EPS in the case of convertible debt and convertible preferred stock
O B. The if-converted assumption is always applied to diluted EPS, as long as the results are not antidilutive. However, this assumption
is also applied to basic EPS in the case of actual stock dividends and stock splits
OC. The if-converted assumption is always applied to diluted EPS, as long as the results are antidilutive. However, this assumption is
also applied to basic EPS in the case of convertible debt and convertible preferred stock
O D. The if-converted assumption is always applied to diluted EPS, as long as the results are antidilutive. However. this assumption is
also applied to basic EPS in the case of actual stock dividends and stock splits
Chapter 20 Solutions
Intermediate Accounting
Ch. 20 - Prob. 20.1QCh. 20 - Prob. 20.2QCh. 20 - If-Converted Method. Does the if-converted...Ch. 20 - Diluted EPS. If all potentially dilutive...Ch. 20 - Diluted EPS. Can diluted earnings per share on...Ch. 20 - Diluted EPS, Convertible Debt, and Preferred...Ch. 20 - Prob. 20.7QCh. 20 - Prob. 20.8QCh. 20 - Prob. 20.9QCh. 20 - EPS Disclosures. is an entity required to present...
Ch. 20 - Prob. 20.11QCh. 20 - Hutchins Company had 200,000 shares of common...Ch. 20 - Prob. 20.2MCCh. 20 - Prob. 20.3MCCh. 20 - Prob. 20.4MCCh. 20 - Refer to the information about Hutchins Company in...Ch. 20 - Prob. 20.6MCCh. 20 - Prob. 20.1BECh. 20 - Prob. 20.2BECh. 20 - Computing Income for Basic EPS. Russo Watches, Ltd...Ch. 20 - Prob. 20.4BECh. 20 - Compute Weighted-Average Number of Shares...Ch. 20 - Compute Weighted-Average Number of Shares...Ch. 20 - Prob. 20.7BECh. 20 - Prob. 20.8BECh. 20 - Prob. 20.9BECh. 20 - Prob. 20.10BECh. 20 - Prob. 20.11BECh. 20 - Computing Basic and Diluted EPS, Options. Nicks...Ch. 20 - Computing Diluted EPS, Convertible Debt. Axelon...Ch. 20 - Computing Basic and Diluted EPS, Preferred Stock....Ch. 20 - Computing Weighted-Average Number of Common Shares...Ch. 20 - Prob. 20.3ECh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.5ECh. 20 - Computing Basic and Diluted EPS, Convertible Bonds...Ch. 20 - Computing Basic and Diluted EPS, Convertible Bonds...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Options,...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.12ECh. 20 - Prob. 20.1PCh. 20 - Prob. 20.2PCh. 20 - Computing Basic and Diluted EPS. Convertible...Ch. 20 - Prob. 20.4PCh. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Computing Basic and Diluted EPS, Convertible...Ch. 20 - Prob. 20.7PCh. 20 - Prob. 20.8PCh. 20 - Prob. 1JCCh. 20 - Prob. 1FSCCh. 20 - Prob. 1SSCCh. 20 - Basis for Conclusions Case 1: Antidilutive...Ch. 20 - Basis for Conclusions Case 2: Treasury Stock...
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- What determines if a potentially dilutive security is dilutive or anti-dilutive? a. the share price b. the terms c. all of the abovearrow_forwardApart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share Price, Dividend Per Share, ROE and the discount rate (R). And what are the assumptions and the limitations of this model? Is it the PEG ratio or not??arrow_forwardDefine the following terms. Basic earnings per share. Potentially dilutive security. Diluted earnings per share. Complex capital structure. Potential common stock.arrow_forward
- Share Price can be determined by the cash flows and risk. Assume other things held constant, increased in risk will result in a. a lower share prices b. a higher share prices c. unchanged share price d. an undetermined share pricesarrow_forwardWhat are the similarities and differences between an overall rate and an equity dividend rate?arrow_forwardHow do stock repurchases affect the EPS and ROE ratios?arrow_forward
- What does the capital asset pricing model (CAPM) calculate? a. The expected rate of return on an individual stock with respect to the risk-free rate of return b. The expected rate of return of an individual stock based on its overall risk c. The expected rate of return of an individual stock with respect to its market risk only d. The expected rate of return of an individual stock reflecting its financial risk Clear my choicearrow_forwardFor arbitrage strategies involving multiple share classes of ordinary stocks, which of the following arbitrage costs/risks is the LEAST important? O A. Direct trading costs (both current costs; and the uncertainty about future costs). B. Systematic risk OC. Horizon risk and idiosyncratic risk O D. Short-selling costs (both current costs; and the uncertainty about future costs).arrow_forwardExplain what a residual policy implies (assuming that all distributions are in the form of dividends), illustrating your answer with a table showing how different investment opportunities could lead to different dividend payout ratios.arrow_forward
- Choose the correct answer: Equity security acquired for non-trading and the shares are not enough to warrant significant influence should be measured at the end of the period a. cost, being the purchase price b. cost, being the purchase price plus transaction costs c. fair value, with change in FV taken through profit or loss. d. fair value, with change in FV taken through other comprehensive incomearrow_forwardThe Valuation Principle states that the value of a stock is equal to the present value (PV) of both the dividends and future sale price of that stock which the investor will receive. True Falsearrow_forwardApart from using PE ratio, what is another way of valuing the stock price? if we have the EPS, Share Price, Dividend Per Share, ROE and the discount rate (R). And what are the assumptions and the limitations of this model? What can be said about the dividend growth model? Similarly what can be said about the capital asset pricing model?arrow_forward
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