A company is required to report both basic and diluted earnings per share when the:
A)company's capital structure includes convertible preferred stock.
B)company prepares consolidated financial statements.
C)company has foreign currency transaction gains and losses.
D)company reports both net income and comprehensive income.

Question

Quizplus · Accepted Answer

Companies with complex capital structures, such as those with convertible preferred stock, must report both basic and diluted earnings per share to reflect the potential dilution of earnings if the convertible securities were converted into common stock.

A Company Is Required to Report Both Basic and Diluted