Section 2: 35–45%B10
Stock Compensation, EPS, and Segment Reporting
Exam Insight
Stock compensation, earnings per share, and segment reporting are reliable BAR point-getters because they are formula- and threshold-driven. The exam consistently tests the treasury stock method, the if-converted method, the antidilution rule, and the 10% and 75% segment tests.
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What AICPA Wants You to Know
- 1Measure and recognize stock option compensation expense using the fair-value method over the vesting period.
- 2Account for restricted stock units (RSUs) and distinguish them from options.
- 3Compute basic EPS using weighted-average common shares outstanding.
- 4Compute diluted EPS using the treasury stock method and the if-converted method.
- 5Apply the antidilution rule so only dilutive securities are included in diluted EPS.
- 6Identify reportable operating segments using the 10% thresholds and the 75% external-revenue test.