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Question
The denominator used in the calculation of basic earnings per share is the
A. number of common shares outstanding at the end of the year.
B. number of preferred shares outstanding at the end of the year.
C. weighted average number of common shares outstanding during the year.
D. weighted average number of common shares and preferred shares outstanding during the year.
Answer
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D. Outstanding stock options.
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Assuming that the preferred stock is cumulative, and that there are no dividends in arrears, what is the maximum dividend that may be distributed to common shareholders at December 31, 2012?
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What is the owners' equity balance on December 31, 2012?
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D. Whether creditors or shareholders provided the firm's assets is irrelevant.
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SFAS No. 123 required companies to use the fair value approach when determining compensation expense pertaining to stock options.