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Basic earnings per share belongs in a reconciled numerator-and-denominator workpaper. Basic EPS divides income available to common shareholders by weighted-average common shares outstanding. Reconcile the numerator and denominator independently before dividing, and preserve each required statement component and comparative period.
Apply it
If income available to common shareholders is $4,200,000 and weighted-average common shares are 1,050,000, basic EPS is $4.00. Keep full precision in the workpaper before applying the presentation rounding policy.
Reconcile the displayed amount back to both schedules after rounding.
Review basic earnings per share against income available to common shareholders. Reconcile basic earnings per share to weighted average common shares, the dated basic earnings per share evidence, and its final presentation.
Keep the boundary clear
Basic EPS excludes assumed exercises and conversions. Participating securities may require a two-class allocation before the common numerator is divided by common shares.
Authority
Read ASC 260-10-45-10 for the basic-EPS computation.
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- Income available to common shareholders — Apply
To apply this concept: Required. This earlier step supplies an input required by the EPS workpaper.
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Related concepts
- Diluted earnings per share
- EPS numerator and denominator reconciliation
- Income available to common shareholders
Show 3 more related concepts
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- EPS control number — Apply
Required level here: apply. Required. This earlier step supplies an input required by the EPS workpaper.
- Per-share effect of an accounting change or error — Understand
Required level here: apply. Required. The learner must already compute period-specific basic EPS.
- Potential common shares — Apply
Required level here: apply. Required. This earlier step supplies an input required by the EPS workpaper.