Question

When computing diluted earnings per share, convertible securities are

a. ignored.
b. recognized only if they are dilutive.
c. recognized only if they are antidilutive.
d. recognized whether they are dilutive or antidilutive.

Answer 1

Convertible securities are recognized in the computation of diluted earnings per share, whether they are dilutive or antidilutive.

Step-by-step explanation:

When computing diluted earnings per share, convertible securities are recognized whether they are dilutive or antidilutive. Convertible securities are financial instruments that can be converted into common shares of a company. These securities have the potential to decrease the earnings per share if converted. Therefore, they are recognized in the computation of diluted earnings per share.