When Computing Diluted Earnings Per Share, Which of the Following

question 25

Multiple Choice

When computing diluted earnings per share, which of the following will not be considered in the calculation?

• A) Dividends paid on common stock.
• B) The weighted average common shares.
• C) The effect of stock splits.
• D) The number of common shares represented by stock purchase warrants.

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Definitions:

Pooling-of-interests Method

A merger accounting method where the assets and liabilities of merging companies are combined using their book values.

Acquisition Method

An accounting approach used to consolidate the financial statements of two companies when one company acquires control over the other.

Purchase Method

An accounting method used in mergers and acquisitions where the assets and liabilities of the acquired company are added to the acquirer's balance sheet at their fair market values.

Business Combination

A transaction or event in which an acquirer obtains control of one or more businesses, often involving mergers, acquisitions, or consolidations.