Chapter - Dilutive securities and earnings per share. After completing this chapter you should be able to: Describe the accounting for the issuance, conversion, and retirement of convertible securities, explain the accounting for convertible preferred stock, contrast the accounting for stock warrants and for stock warrants issued with other securities, describe the accounting for stock compensation plans under generally accepted accounting other contents. | Volume 2 C H A P T E R 16 DILUTIVE SECURITIES AND EARNINGS PER SHARE Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield Describe the accounting for the issuance, conversion, and retirement of convertible securities. Explain the accounting for convertible preferred stock. Contrast the accounting for share warrants and for share warrants issued with other securities. Describe the accounting for share compensation plans. Discuss the controversy involving share compensation plans. Compute earnings per share in a simple capital structure. Compute earnings per share in a complex capital structure. Learning Objectives Debt and equity Convertible debt Convertible preference shares Share warrants Accounting for share compensation Dilutive Securities and Compensation Plans Computing Earnings Per Share Simple capital structure Complex capital structure Dilutive Securities and Earnings Per Share Debt and Equity Share Options Convertible Securities Preference Shares Should companies report these instruments as a liability or equity. (at the holder’s option) Benefit of a Bond (guaranteed interest and principal) Privilege of Exchanging it for Shares Bonds which can be changed into other corporate securities are called convertible bonds. + Convertible Debt LO 1 Describe the accounting for the issuance, conversion, and retirement of convertible securities. Desire to raise equity capital without giving up more ownership control than necessary. Obtain common stock financing at cheaper rates. Two main reasons corporations issue convertibles: Convertible Debt LO 1 Describe the accounting for the issuance, conversion, and retirement of convertible securities. Convertible Debt LO 1 Describe the accounting for the issuance, conversion, and retirement of convertible securities. Convertible debt is accounted for as a compound instrument. Companies use the “with-and-without” method to value compound . | Volume 2 C H A P T E R 16 DILUTIVE SECURITIES AND EARNINGS PER SHARE Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield Describe the accounting for the issuance, conversion, and retirement of convertible securities. Explain the accounting for convertible preferred stock. Contrast the accounting for share warrants and for share warrants issued with other securities. Describe the accounting for share compensation plans. Discuss the controversy involving share compensation plans. Compute earnings per share in a simple capital structure. Compute earnings per share in a complex capital structure. Learning Objectives Debt and equity Convertible debt Convertible preference shares Share warrants Accounting for share compensation Dilutive Securities and Compensation Plans Computing Earnings Per Share Simple capital structure Complex capital structure Dilutive Securities and Earnings Per Share Debt and Equity .
