The contents of this chapter include all of the following: List the four important issues that must be addressed when accounting for inventory, and briefly describe how inventory valuation affects earnings; describe how to decide which costs to capitalize in the inventory account;. | Dilutive Securities and Earnings per Share PART II: Corporate Accounting Concepts and Issues Lecture 17 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 principles. Discuss the controversy involving stock 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 preferred stock Stock warrants Accounting for 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 Stock Options Convertible Securities Preferred Stock Should . | Dilutive Securities and Earnings per Share PART II: Corporate Accounting Concepts and Issues Lecture 17 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 principles. Discuss the controversy involving stock 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 preferred stock Stock warrants Accounting for 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 Stock Options Convertible Securities Preferred Stock 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 Stock Bonds which can be changed into other corporate securities are called convertible bonds. + Accounting for 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: LO 1 Describe the accounting for the issuance, conversion, and retirement of convertible securities. Accounting for Convertible Debt At Time of Issuance Accounting for Convertible Debt LO 1 Describe the accounting for the issuance, conversion, and retirement of convertible securities. Convertible bonds recorded as straight debt issue, with any discount or premium amortized over the term of the debt. Archer issued
