Welcome to Luca!globe
FASB ISSUES TWO NEW STANDARDS In March 1997, F... Current Issue!    Navigation Tips!
Main Menu
CPA Journal
FAE
Professional Libary
Professional Forums
Member Services
Marketplace
Committees
Chapters
     Search
     Software
     Personal
     Help

FASB ISSUES TWO NEW STANDARDS

In March 1997, FASB issued two new statements of financial accounting--No. 128 Earnings per Share and No. 129 Disclosure of Information About Capital Structure. The two standards are the result of an exposure draft issued in January 1996 on earnings per share. The board decided to split the standard because the earnings per share aspects relate to public companies, whereas the capital structure disclosures apply to all entities.

Earnings per Share. Statement 128 is an effort to simplify the current standards in the U.S. for computing earnings per share (EPS) and make them compatible with international standards. The International Accounting Standards Committee recently issued a comparable standard. Statement 128 applies to entities with publicly held common stock or potential common stock and is effective for financial statements issued for periods ending after December 15, 1997. It replaces APB Opinion 15, Earnings per Share. Opinion 15 required that entities with simple capital structures present a single "earnings per common share" on the face of the income statement, whereas those with complex capital structures had to present both "primary" and "fully diluted" EPS. Statement 128 simplifies the computation by replacing the presentation of primary EPS with basic EPS. Basic EPS is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding during the period. Public entities with other than simple capital structures will also have to present diluted earnings per share, which is computed by increasing the average number of common shares outstanding by the number of additional shares that would have been outstanding if potentially dilutive common shares had been issued. Early application of the standard is not permitted; after the effective date, prior periods presentations will have to be restated on the basis of the new standard.

Disclosure of Information About Capital Structure. Statement 129 consolidates existing disclosure requirements for ease of retrieval; it contains no change in disclosure requirements for companies that were subject to the previously existing requirements. It applies to all entities and is effective for financial statements issued for periods ending after December 15, 1997. *



The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

©2009 The New York State Society of CPAs. Legal Notices

Visit the new cpajournal.com.