A registrant determines the form, item and reporting period for each disclosure, then computes applicable basic and diluted earnings per share from income and dated capital transactions.
A U.S. registrant is an entity whose securities are registered with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. The act requires periodic and current reports so that investors receive audited annual results, unaudited quarterly updates and prompt notice of major events between those reports.
The annual periods above describe the general domestic-registrant requirement. Qualifying smaller reporting companies may use scaled financial statements with two years of income, comprehensive income, cash flows and changes in equity. Apply any other available issuer-specific relief to the facts supplied.
KEY: There is no fourth-quarter Form 10-Q. Fourth-quarter amounts can be derived by subtracting comparable nine-month cumulative amounts from annual amounts, using consistent accounting and presentation. This shortcut applies to additive amounts such as revenue and net income; it does not apply to EPS or weighted-average shares.
Common mistakes
- Year-end price in the treasury stock method. Using the $46 December price instead of the $40 average gives incremental shares, overstating dilution. Each quarter uses its average market price; the year-to-date denominator weights those quarterly incremental shares.
- Weighting a stock dividend. Treating the June 30 dividend as new weighted shares instead of restating the full 40,000 (and the 6,000 on the combination shares) for the whole year understates the denominator.
- Skipping the undeclared cumulative dividend. Dividing $1,290,000 by 487,500 gives $2.65 instead of $2.40. Cumulative preferred is deducted whether declared or not; noncumulative only when declared.
Bottom line
- Form 10-K is the audited annual report and Form 10-Q the unaudited condensed report for the first three quarters. Form 8-K reports specified events, generally within four business days after the event, with item-specific exceptions and applicable financial information.
- Deadlines by filer status: large accelerated 60 and 40 days, accelerated 75 and 40 days, non-accelerated 90 and 45 days (10-K, then 10-Q).
- For initial classification with the reporting-history conditions met, smaller-reporting-company relief uses float under $250 million or revenues under $100 million with float under $700 million or no float.
- Form 10-Q Part I: Item 1 financial statements, Item 2 MD&A, Item 3 market risk. Form 10-K Part II: Item 7 MD&A, Item 7A market risk, Item 8 audited financial statements and supplementary data.
Exam shortcut
Match the requested reporting period to income, preferred claims and share dates. Include all required option proceeds and rank instruments using full-precision incremental ratios. Apply the continuing-operations control number consistently across every presented EPS component. For filings, check form, item, reporting history and applicable relief before selecting the reporting period or deadline.
The full lesson (about 6,460 words, 43 min read) adds 6 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- I.D1
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