Lesson: Public company reporting topics - Practice Questions

Instructor: Nick Palazzolo

In this lesson, Nick Palazzolo, CPA, dives into practical exercises concerning public company reporting, particularly focusing on earnings per share (EPS) calculations. Guiding through a series of detailed examples, he explores how to determine the weighted average number of common shares outstanding, an essential denominator in the basic EPS formula. Nick walks through various corporate events such as share issuances, stock dividends, and treasury stock purchases, emphasizing their impact on the EPS computation. By the end of the lesson, viewers will have enhanced their skills in handling common stock transactions and their effects on financial reports, all carried out with Nick's engaging storytelling and step-by-step problem-solving approach.

Updated: June 18, 2024 Create an account

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Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Welcome back, everybody, to another question here on examprep.ai. We've got some questions on public company reporting topics. Let's dive in. There's enough information here that makes me want to read the question first. And it says, What is BOM's weighted average of common stock outstanding at December 31st? Now, if I'm seeing this mixed in with other questions, and I don't necessarily know that I'm in public company reporting topics, I know that in here, we're going to talk about EPS. Just familiarity with the material and the lectures and lessons. We know that this has to do with EPS. And where does this fit in terms of EPS and all that? Think about it for a second. This is going to be our denominator in our basic EPS formula. Basic EPS is net income divided by common shares outstanding. To elaborate on that further, it's weighted average common stock outstanding for the whole year. And in the numerator, you're also going to take into account your preferred dividends as well, if you have them. A lot of times we don't, but sometimes we do. Let's dive in to determine these portions. BOM company had 100,000 shares of common stock outstanding as of January 1st, and the following events occurred during the year. And I like to describe these ones as story questions. It kind of tells a story, what's happening during the year. We've got different dates, different time periods that each of these things happen. Let's start with 1-1. That's the beginning of the year. We're talking about the full year starts as of January 1st and goes till December 31st. All right, so our first period is from January 1st to April 1st. So that first period in our year, we had 100,000 shares outstanding as

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Conceptual Framework and Standard-setting for Business and Nonbusiness Entities

Module: 4 Concepts, 43 Lessons

Conceptual Framework Overview

1:57

Conceptual Framework Objectives

0:44

FASB Statements of Financial Accounting Concepts

0:47

Basis Objectives of Financial Reporting