Question

A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is

Dilutive Antidilutive
a. Yes Yes
b. Yes No
c. No Yes
d. No No

Answer 1

A convertible bond issue should be included in the diluted earnings per share computation if it is dilutive.

Step-by-step explanation:

A convertible bond issue should be included in the diluted earnings per share computation as if the bonds had been converted into common stock, if the effect of its inclusion is Dilutive. This means that if the conversion of the convertible bonds would result in a decrease in earnings per share, they should be included in the computation to reflect the potential dilution of existing shares.