Neumann Company computed earnings per share as follows. Net incomeCommon shares outstanding at year-endNet incomeCommon shares outstanding at year-end Neumann has a simple capital structure. What possible errors might the company have made in the computation? Explain.

Neumann Company computed earnings per share as follows. Net incomeCommon shares outstanding at year-endNet incomeCommon shares outstanding at year-end Neumann has a simple capital structure. What possible errors might the company have made in the computation? Explain.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter14: Intercorporate Investments In Common Stock

Section: Chapter Questions

Problem 3Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Neumann Company computed earnings per share as follows.

Net incomeCommon shares outstanding at year-endNet incomeCommon shares outstanding at year-end

Neumann has a simple capital structure. What possible errors might the company have made in the computation? Explain.

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