Reference no: EM132471779

(EPS-Simple Capital Structure) Koala Inc., a publicly traded company, had 210,000 common shares outstanding on December 31, 2019. During 2020, the company issued 8,000 shares on May 1 and retired 14,000 shares on October 31. For 2020, the company reported net income of $229,690 after a loss from discontinued operations of $40,600 (net of tax).

Instructions

Question a. Calculate earnings per share for 2020 as it should be reported to shareholders. Round to the nearest cent.

Question b. Assume that Koala Inc. issued a 3-for-1 stock split on January 31, 2021, and that the company's financial statements for the year ended December 31, 2020, were issued on February 15, 2021. Calculate earnings per share for 2020 as it should be reported to shareholders. Round to the nearest cent.

Question c. Discuss why Koala Inc.'s reporting of earnings per share is useful for financial statement analysis.

Question d. Is it possible for a corporation to have a simple capital structure one fiscal year and a complex capital structure in another fiscal year? If yes, how could this happen?

Question e. How would Koala's EPS reporting requirements differ if the company were a privately owned company using ASPE?