Basic and Diluted Earnings (Loss) Per Share
|3 Months Ended|
Jul. 31, 2021
|Earnings Per Share [Abstract]|
|Basic and Diluted Earnings (Loss) Per Share||
2. Basic and Diluted Earnings (Loss) Per Share
ASC 260, Earnings Per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings (loss) per share. The Company has granted and expects to continue to grant to certain employees under its restricted stock agreements grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, the Company is required to apply the two-class method in calculating earnings (loss) per share. The two-class method of computing earnings (loss) per share is an earnings allocation formula that determines earnings (loss) per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the treasury method or the two-class method.
Basic earnings (loss) per common share was computed using the two-class method by dividing basic net earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per common share was computed using the two-class method by dividing diluted net earnings (loss) attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or other contracts to issue common stock as if they were exercised or converted. Financial instruments that are not in the form of common stock, but when converted into common stock increase earnings per share, are anti-dilutive and are not included in the computation of diluted earnings (loss) per share. For the three months ended July 31, 2020, the Company was in a net loss position and diluted net loss per share therefore excluded the effects of common equivalents consisting of restricted awards, which were all antidilutive.
During the three months ended July 31, 2021 and 2020, restricted stock awards of 1.4 million and 1.7 million were outstanding, respectively, but not included in the computation of diluted earnings (loss) per share because they were anti-dilutive.
The following table summarizes basic and diluted earnings (loss) per common share attributable to common stockholders:
The entire disclosure for earnings per share.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef