[Anonymous]

I m just wondering, when do you dilute shares and when do you not dilute? I.e. do you dilute shares when calculating EPS which has weighted average common shares outstanding in the denominator?

[Anonymous]

You always use weighted average common shares outstanding whether calculating basic EPS or diluted EPS. You only consider the dilutive items (convertible bonds etc.) when the problem says to calculate diluted EPS.

Note: I think that's right. If anyone else reads this, please call it out if I'm wrong. Thanks.

[M.O.D.]

If the question calls for BEPS (Basic EPS) you do not dilute.

If the question calls for DEPS (Diluted EPS) you have to consider all convertibles (ie whatever increases the number of shares outstanding), that have the effect of lowering Basic EPS.

Note that for DEPS you will have to add the new shares to be denominator from BEPS. It will always be increased, otherwise there could not be a diluting effect.

BA Mathematics, UC Berkeley
Certificates in CPA and EA preparation, College of San Mateo
CMA I 420, II 470
FAR 91, AUD Feb 2015 (Gleim self-study)

[MattCPA18]

Im taking FAR on Friday and Im reviewing EPS now. I have a quick question….

When calculating basic EPS, I am confused on how to determine what preferred dividends to subtract from net income. Is it the dividends paid or declared? and does cumulative vs non-cumulative matter?

[Me.]

MattCPA18: Preferred dividends are ALWAYS subtracted if they are cumulative and if they are non-cumulative ONLY if declared. I hope that helps.

REG - 50, 64, 73, 76
FAR - 67, 65, 67 Ugh!!!
BEC - 65
AUD - November 30

"You just can't beat the person who never gives up." -Babe Ruth

[Rocky123]

@Matt

I'm struggling with EPS too. Doesn't come second nature to me like some of the other topics do.

Good luck on your exam!!! Let us know how it went.

The tallest oak in the forest was once just a little nut that held its ground.

AUD-PASS
BEC-PASS
REG-PASS
FAR-PASS

Rocky123, CPA

[MattCPA18]

FormerCaliGirl- thanks that confirms that for me

Rocky123 – thanks, this is my last part so im cramming as many topics as I can into my head…im sure ill be posting more questions throughout the week

[Rocky123]

@Matt

My last section too. FAR. The beast. We got this.

The tallest oak in the forest was once just a little nut that held its ground.

AUD-PASS
BEC-PASS
REG-PASS
FAR-PASS

Rocky123, CPA

[Anonymous]

Surprisingly, no one has posted in the FAR experience thread recently. The most recent post was 3 weeks ago.

[CPA soon]

Because everyone that passed it wants to forget it lol..nightmare

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[Author]

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