Reference no: EM132460492

Facts For the year ended December 31, X1 Target Inc. had net income of $10,000. At this date Target had 1,000 common shares issued and outstanding [par value =$1 per share]. The number of common shares issued and outstanding did not change during the X1 year. Also, Target Inc. has no outstanding convertible securities. Target Inc. issued its December 31, X1 annual report to shareholders on February 1, X2. On January 15, X2 the Board of Directors declared a 10% stock dividend to be disu'ibuted on January 20, X2. At the date of declaration the market price of the common stock was $10 per share. ! Iuestiun Does the stock dividend declared and distributed in early X2 affect the EPS disclosure that will appear in the December 31, X1 annual report? Required

Question 1. Provide a brief written description of the proper treatment for the January 15, X2 stock dividend with respect to the December 31, X1 EPS disclosure.

Question 2. Compute the EPS disclosure that will appear in the December 31, X1 annual report.

Question 3. Identify the speci?c paragraph of the FASB Codi?cation which addresses this issue and submit a printout of this paragraph with your solution.