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Weighted-average common shares belongs in a reconciled numerator-and-denominator workpaper. Weighted-average common shares measure the time-weighted common shares outstanding during the reporting period. Build dated intervals from the share register, apply the day or other consistent weighting convention, and then make required retrospective share adjustments.
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An entity has 1,000,000 shares from January 1 and issues 200,000 on October 1. In a 12-month illustration, weighted shares are 1,000,000 plus 200,000 times 3/12, or 1,050,000.
Review weighted-average common shares against outstanding shares. Reconcile weighted-average common shares to retroactive share adjustment, the dated weighted-average common shares evidence, and its final presentation.
The weighted-average common shares record ties outstanding shares to its source date, measured amount, and retroactive share adjustment effect.
Keep the boundary clear
Ending outstanding shares do not capture midperiod issues or repurchases. Potential common shares enter diluted EPS through their own methods rather than the basic weighted average.
Authority
Read ASC 260-10-45-10 for the weighted-average denominator for basic EPS.
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- Outstanding shares — Apply
To apply this concept: Required. This earlier step supplies an input required by the EPS workpaper.
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- Retroactive share adjustment — Apply
Required level here: apply. Required. This earlier step supplies an input required by the EPS workpaper.