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Basic Question 20 of 40
In determining earnings per share (EPS), the interest expense on convertible debt that is dilutive (net of applicable taxes) should be ______
B. ignored for basic EPS and added back to net income for diluted EPS.
C. added back to net income for both basic and diluted EPS.
A. ignored for both basic and diluted EPS.
B. ignored for basic EPS and added back to net income for diluted EPS.
C. added back to net income for both basic and diluted EPS.
User Contributed Comments 5
| User | Comment |
|---|---|
| eb2568 | ...DOH! |
| jainrajeshv | I m confused now, when we are calculign the Basic EPS we have to deduct the Interest expenses payable to convertible bond holder. Am I wrong? Pls Reply |
| Dinosaur | That is already in net income ... |
| gazelle | f convertible debt is dilutive, then debt's after-tax interest expense is not considered an interest expense for diluted EPS=> interest expense multiplied by (1- tax rate) must be added back to numerator (Net income). |
| johntan1979 | I think someone needs to go back to kindy to learn more words than just doh |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
describe how earnings per share is calculated and calculate and interpret a company's basic and diluted earnings per share for companies with simple and complex capital structures including those with antidilutive securities
CFA® 2024 Level I Curriculum, Volume 2, Module 2.