Preface

We are pleased to present the 2023 edition of Earnings per Share. This Roadmap provides an overview of the accounting and disclosure guidance in ASC 2601 as well as insights into and interpretations of how to apply the guidance in practice. In addition, the discussion is accompanied by excerpts from the related authoritative text.

The calculation of EPS is a complex aspect of GAAP that is largely governed by “rules-based” guidance developed over many years in response to requests by constituents for interpretive guidance on certain narrow issues. The impact that specific transactions or instruments have on EPS is often viewed as not necessarily reflecting the economics of such transactions or instruments. Such complexity affects preparers as well as users.

The 2023 update of this Roadmap contains new and expanded guidance on certain matters related to calculating basic and diluted EPS. Note that in this edition, it is assumed that an entity has already adopted ASU 2020-06 and ASU 2021-04. For a listing of significant changes made since the issuance of the 2022 edition of this publication, see Appendix F.

We hope you find this Roadmap useful in navigating the EPS accounting and disclosure guidance, reducing complexity, and arriving at appropriate accounting conclusions. In addition, we welcome your suggestions for future improvements to the publication. If you need assistance with applying the guidance or have other questions about this topic, we encourage you to consult with our technical specialists and other professional advisers.