Final answer:
Complex capital structures and dual presentation of earnings per share require additional disclosures in note form in the financial statements of companies. These disclosures provide information about different types of securities and their impact on earnings per share calculations.
Step-by-step explanation:
In finance and accounting, complex capital structures refer to companies that have multiple types of securities issued, such as common stock, preferred stock, and debt. Dual presentation of earnings per share means that companies with complex capital structures must present two earnings per share numbers: basic EPS and diluted EPS. Basic EPS only considers common shares, while diluted EPS takes into account all potential common shares, including stock options and convertible securities.
When a company has complex capital structures, additional disclosures are required in the notes to the financial statements. These disclosures provide detailed information about the different types of securities issued and their impact on earnings per share calculations. The purpose of these disclosures is to ensure transparency and clarity for investors and other financial statement users.
For example, a company may disclose the number of common shares outstanding and the potential dilutive effect of stock options or convertible bonds. This helps investors better understand the potential impact on earnings per share if all the potential shares were to be exercised or converted into common shares.