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Chapter 16: Q4IFRS (page 895)

Briefly discuss the convergence efforts that are under way by the IASB and FASB in the area of dilutive securities and earnings per share.

Short Answer

Expert verified

The convergence of accounting depicts the objectives and the endeavours of laying out a uniform arrangement of accounting measures, which will be globally utilized.

Step by step solution

01

Explanation on convergence efforts

A convergence is an active agenda project conducted mutually by the FASB and the IASB, which expects to bring about at least one guideline that will accomplish a union in specific regions.

02

Explanation related earnings per share convergence

The endeavours that are in progress for a convergence by the IASB and the FASB in a dilutive securities region and in earnings per share are the same. A project is limited to the distinctions between the US GAAP and the IFRS, where an excellent arrangement appears to be reachable, related to the computations of an earnings per share.

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Most popular questions from this chapter

What is meant by the term antidilution? Give an example.

What date or event does the profession believe should be used in determining the value of a stock option? What arguments support this position?

(Issuance, Exercise, and Termination of Stock Options) On January 1, 2018, Titania Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company’s \(10 par common stock at \)25 per share. The options were exercisable within a 5-year period beginning January 1, 2020, by grantees still in the employ of the company, and expiring December 31, 2024. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be \(350,000.On April 1, 2019, 2,000 options were terminated when the employees resigned from the company. The market price of the common stock was \)35 per share on this date.On March 31, 2020, 12,000 options were exercised when the market price of the common stock was $40 per share.

Instructions

Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2018, 2019, and 2020.

Bridgewater Corp. offered holders of its 1,000 convertible bonds a premium of \(160 per bond to induce conversion into shares of its common stock. Upon conversion of all the bonds, Bridgewater Corp. recorded the \)160,000 premium as a reduction of paid-in capital. Comment on Bridgewater’s treatment of the $160,000 “sweetener.”

DiCenta Corporation reported net income of \(270,000 in 2017 and had 50,000 shares of common stock outstanding throughout the year. Also outstanding all year were 5,000 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend of \)5 per share. DiCenta’s tax rate is 40%. Compute DiCenta’s 2017 diluted earnings per share.
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