Question #18 - Reading 9 Employee Compensation - Post-Employment and Share-Based

Reading: Reading 9 Employee Compensation - Post-Employment and Share-Based

PDF File: Reading 9 Employee Compensation - Post-Employment and Share-Based.pdf

Page: 6

Status: Unattempted

Correct Answer: A

Shared Context

- The change in stock-holder's equity at the end of 20X1 on account of the share-based compensation is closest to: A) $133,333. B) $0. C) $222,833.

Question

For this question only, suppose that Prisma reports a net loss for 20X1. Which of the following statements is most accurate?

Answer Choices:

A. Unvested options that are out-of-money are considered dilutive

C. Prisma’s basic EPS and fully diluted EPS would be the same.

Explanation

If a company reports net loss, basic EPS and fully diluted EPS would be the same (i.e., dilutive securities = 0). The treasury stock method nets the number of hypothetically repurchased shares against the total number of potentially dilutive securities. Unvested options that are in-the-money are considered dilutive. The number of hypothetically repurchased shares is based on the average share price during the reporting period.

Actions

Practice Flashcards