Basic earnings per share and fully diluted earnings per share are calculated for a corporation
A) with a complex capital structure.
B) that has both preferred shares and common shares issued.
C) that has cumulative preferred dividends in arrears.
D) that has a disposal of a segment of the business and an extraordinary item reported on its income statement.

Question

Quizplus · Accepted Answer

Basic earnings per share (EPS) and fully diluted EPS are calculated for corporations with a complex capital structure, which includes various types of securities that could potentially be converted into common stock, affecting the EPS calculation.

Basic Earnings Per Share and Fully Diluted Earnings Per Share