The treasury stock method is used to incorporate the dilutive effect of stock options, stock warrants, and similar securities. Describe this method as it applies to diluted EPS.
Answer to relevant QuestionsThe potentially dilutive effect of convertible securities is reflected in EPS calculations by the if-converted method. Describe this method as it relates to convertible bonds.Diluted EPS would be precisely the same whether convertible securities were actually converted or not. Why?Refer to the situation described in BE 19-2. Suppose that unexpected turnover during 2012 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2012? In 2013?At December 31, 2010 and 2011, Funk & Noble Corporation had outstanding 820 million shares of common stock and 2 million shares of 8%, $100 par value cumulative preferred stock. No dividends were declared on either the ...On January 1, 2011, Adams-Meneke Corporation granted 25 million incentive stock options to division managers, each permitting holders to purchase one share of the company's $1 par common shares within the next six years, but ...
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