Final answer:
Contingent issuable shares are only considered in the calculation of diluted EPS, not basic EPS. Diluted EPS accounts for the potential increase in share count from conversions or exercises of options, while basic EPS is based on the current actual number of outstanding shares. The correct option is c. both basic and diluted eps.
Step-by-step explanation:
The student's question concerns the calculation of earnings per share (EPS), which falls under the subject of accounting in the broader field of business. Specifically, they are asking whether contingent issuable shares are included in the calculation of basic EPS or diluted EPS.
The answer is that contingent issuable shares are usually considered in the calculation of diluted EPS (Earnings Per Share).
The purpose of diluted EPS is to show the potential dilution of shares that could occur if all options and other securities that can be converted into common stock were exercised.
Basic EPS is calculated only with the actual number of shares outstanding, without considering the potential increase in shares from conversions or the exercise of options.
Therefore, contingent issuable shares do not impact the basic EPS but are a key factor in assessing the diluted EPS, which provides a worst-case scenario for the earnings per share if all possible shares were issued. The correct option is c. both basic and diluted eps.