2.1 General

ASC 260-10

Entities

15-2 The guidance in the Earnings per Share Topic requires presentation of earnings per share (EPS) by all entities that have issued common stock or potential common stock (that is, securities such as options, warrants, convertible securities, or contingent stock agreements) if those securities trade in a public market either on a stock exchange (domestic or foreign) or in the over-the-counter market, including securities quoted only locally or regionally. This Topic also requires presentation of EPS by an entity that has made a filing or is in the process of filing with a regulatory agency in preparation for the sale of those securities in a public market.

15-3 The guidance in this Topic does not require presentation of EPS for investment companies that comply with the requirements of Topic 946 or in statements of wholly owned subsidiaries. Any entity that is not required to present EPS in its financial statements that chooses to present EPS in its financial statements shall do so in accordance with the provisions of this Topic.

ASC 260 establishes guidance on calculating and presenting EPS related to common stock and potential common stock. As noted above in ASC 260-10-15-2 and 15-3, when the following two conditions are met, an entity other than an investment company is required to present EPS in its financial statements:

The entity has outstanding common stock or potential common stock.
The entity’s common stock or potential common stock trades “in a public market” or the entity “has made a filing or is in the process of filing with a regulatory agency in preparation for the sale of [common stock or potential common stock] in a public market.”

Entities subject to ASC 260 must present or disclose, for each financial reporting period, basic EPS and diluted EPS amounts for income from continuing operations, income from discontinued operations, and net income. Entities may voluntarily disclose other per-share metrics in certain circumstances (see further discussion in Section 9.2.3).

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.