Common shares outstanding are increased as a result of a stock dividend or stock split.For purposes of calculating the earnings per share, when is the stock dividend or stock split considered to have occurred?

Question

Quizplus · Accepted Answer

For the purpose of calculating earnings per share, a stock dividend or stock split is treated as if it had occurred at the beginning of the earliest period presented in the comparative financial statements. This retroactive treatment ensures that the calculation of earnings per share is consistent across all periods presented, allowing for meaningful comparison.

Common Shares Outstanding Are Increased as a Result of a Stock