21 the reverse treasury stock method is used for a written call options b written pu 4314545

21 the reverse treasury stock method is used for a written call options b written pu 4314545

21.The reverse treasury stock method is used for

a) written call options.

b) written put options.

c) convertible preferred shares.

d) convertible bonds.

22.Which of the following statements is correct?

a) Options that are in the money are ignored in earnings per share calculations.

b) Options that are out of the money are ignored in earnings per share calculations.

c) Contingently issuable shares are never included in diluted earnings per share calculations.

d) The treasury stock method is used for written put options.

23.The if-converted method of calculating earnings per share data assumes conversion of convertible securities as of the

a) beginning of the earliest period reported (or at time of issuance, if later).

b) beginning of the earliest period reported (regardless of time of issuance).

c) middle of the earliest period reported (regardless of time of issuance).

d) ending of the earliest period reported (regardless of time of issuance).

24.Standard setters are very specific regarding the calculation of EPS for all of the following reasons EXCEPT

a)predictor of future company value.

b)it can be used to assess management stewardship.

c)the income tax consequences of increased share value.

d)because of the dilutive nature of complex financial instruments.

25.All of the following regarding company valuation are true EXCEPT for

a) EPS is the preferred method recommended by standard setters.

b)sustainable cash flow or earnings can be used.

c) EPS can be used because it is considered reliable and all inclusive.

d)using EPS provides a very rough calculation only.

26.The main difference between IFRS and ASPE as it relates to EPS calculations is

a)there is no difference.

b)diluted EPS applies only to IFRS, both use basic EPS.

c)only companies with complex financial structures must calculate EPS under IFRS.

d)there are no prescribed standards under ASPE.

27.Major challenges for standard setters calculating EPS includes all of the following, EXCEPT

a)complex financial instruments.

b)redeveloping standards under ASPE.

c)treatment of conversion features.

d)dilutive securities.

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