Problem

Restating Earnings per Share after a Stock DividendThe 2015 annual report of Software City...

Restating Earnings per Share after a Stock Dividend

The 2015 annual report of Software City, Inc., included the following comparative summary of earnings per share over the last three years:

 

2015

2014

2013

Earnings per share

$3.15

$2.40

$1.64

In 2016, Software City, Inc., declared and distributed a 100 percent stock dividend. Following this stock dividend, the company reported earnings per share of $1.88 for 2016.

a. Prepare a three-year schedule similar to the one above, but compare earnings per share during the years 2016, 2015, and 2014. (Hint: All per-share amounts in your schedule should be based on the number of shares outstanding after the stock dividend.)


b. In preparing your schedule, which figure (or figures) did you have to restate? Why? Explain the logic behind your computation.

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