Should we junk the common stock equivalence test? Predictions versus conversions
Article Abstract:
When calculating primary earnings per share, accountants should include convertible securities only to the extent that such convertibles are likely to be restated as common stock equivalents. Consequently, the Financial Accounting Standards Board (FASB) has issued statements No. 55 and 85, defining common stock equivalence, in an effort to help accountants predict which securities will (and will not) be converted into common stock. An analysis of 115 convertible securities (including both convertible bonds and convertible preferred stock) over a four-year period indicates that neither common stock equivalence test approved by the FASB can adequately predict security conversion, and therefore both tests are unable to help accountants determine which convertible securities should rightfully be included in computations of earnings of per share.
Publication Name: The Woman CPA
Subject: Women's issues/gender studies
ISSN: 0043-7271
Year: 1986
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Taking the ESP out of EPS
Article Abstract:
A new technique for calculating earnings per share is developed. The new technique is easier to understand than the standard one and it is more related to the near-term potential in changes of the number of outstanding common stock, and the present income position. The standard technique's distinction between primary earnings per share and fully diluted earnings per share has been changed to basic earnings per share, which are based on the number of shares outstanding, and adjusted earnings per share, which are based on securities which have a potential for near-term conversion.
Publication Name: The Woman CPA
Subject: Women's issues/gender studies
ISSN: 0043-7271
Year: 1989
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The case for noncomprehensive interperiod tax allocation: the controversy continues
Article Abstract:
In response to the expected issuance of a new corporate income tax standard by the Financial Accounting Standards Board, which would require comprehensive interperiod tax allocations, it is suggested that partial interperiod tax allocation be allowed. This approach eliminates much of the uncertainty in the deferred tax amount by recording only nonrecurring timing differences. Thus, the resulting amount represents liabilities or assets more accurately and on a more current basis.
Publication Name: The Woman CPA
Subject: Women's issues/gender studies
ISSN: 0043-7271
Year: 1986
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