Academic journal article Journal of Accountancy

U.S. and International Standard Setters Issue Earnings-per-Share Proposals

Academic journal article Journal of Accountancy

U.S. and International Standard Setters Issue Earnings-per-Share Proposals

Article excerpt

The Financial Accounting Standards and the International Accounting Standards Committee have issued similar proposals for computing and presenting earnings per share.

The FASB exposure draft, Earnings per Share and Disclosure of Information about Capital Structure, simplifies the current standards of Accounting Principle Board Opinion no. 15, Earnings per Share. It was issued to harmonize U.S. accounting rules with those of other countries. (For details on the FASB and IASC proposals, see "The FASB and the IASC Redeliberate EPS," J of A, Feb.96, page 43.)

"The United States is one of only a few countries that present primary EPS," said Barry P. Robbins, partner of Price Waterhouse in San Francisco. "Now the FASB has decided to go along with the way the rest of the world has looked at presenting EPS and have a measure that is simple, with common stock outstanding." Robbins said the difference between basic and primary EPS was that common stock equivalents are not considered in the computation of basic EPS.

The proposed statement would require the continued disclosure of certain information about an entity's capital structure. It would be effective for financial statements issued for periods ending after December 15, 1997, and early application would not be permitted. The comment deadline for the FASB exposure draft is May 31, 1996. One copy of the FASB proposal is available from the FASB Order Department, 401 Merritt 7, P. …

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