Perspective and Issues


Scope and Scope Exceptions


Definitions of Terms

Concepts, Rules, and Examples

Simple Capital Structure

Computational guidelines



Treasury stock

Stock dividend or stock split

Example of EPS computation—simple capital structure

Preferred stock dividends payable in common shares

Example of preferred stock dividends payable in common shares

Effect of preferred stock dividends payable in common shares on computation of EPS

Complex Capital Structure

Diluted earnings per share

Identification of potentially dilutive securities

Convertible securities

Options and warrants

Participating securities and two-class common stocks

Financial instruments with characteristics of both liabilities and equity

Contingent issuances of common stock

Example of the impact of contingent stock issuances on EPS

Computation of DEPS


Dual presentation of EPS

Examples of EPS Computation—Complex Capital Structure

Example of the treasury stock method

Example of the if-converted method

Participating Securities and the Two-Class Method

Presentation and disclosure

Participating security defined

Allocating earnings and losses

Two-class method

Example – Participating convertible preferred stock

Example – Participating convertible debt instrument

Example – Participating warrants

Effect of Contracts That May Be Settled in Stock or Cash on the Computation of DEPS

Inclusions/Exclusions from Computation of DEPS

The Effect ...

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