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.

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.

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Dilution EngineBasic EPS strips preferred dividends, diluted adds only dilutive shares by treasury-stock and if-converted, and segments clear 10 percent.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.