Reference no: EM132730818

Problem 1: What is the correct treatment of a stock dividend issued in midyear when computing the weighted average number of ordinary shares outstanding for earnings per share purposes?

Group of answer choices

Option 1: The stock dividend should be included in the weighted average number of shares outstanding only if the additional shares result in a decrease of three percent or more in earnings per share.

Option 2: The stock dividend should be ignored since no additional capital was received.

Option 3: The stock dividend should be weighted as if the additional shares were issued at the beginning of the year.

Option 4: The stock dividend should be weighted by the length of time that the additional shares were outstanding during the period.

Problem 2: Compensation expense resulting from a compensatory share option plan is generally

Group of answer choices

Option 1: recognized in the period of exercise.

Option 2: allocated over the periods of the employee's service life to retirement.

Option 3: allocated to the periods benefited by the employee's required service.

Option 4: recognized in the period of the grant.