Explain How the Dividends on Non-Cumulative Preferred Shares Are Adjusted

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The Answer is For non-cumulative preferred shares, deduct the dividends declared (whether paid or not)without considering the stated entitlement.
The logic underlying these requirements is rooted in the matching concept. The company is not required to pay non-cumulative preferred dividends unless the board of directors declares them. Accordingly, it is proper to deduct dividends from net income only if they have been declared.
Also, EPS is based on profit or loss for the period, rather than cash flow; accordingly, we deduct dividends in the period to which they relate rather than when they are paid.

Explain How the Dividends on Non-Cumulative Preferred Shares Are Adjusted

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