Which of the following events is unique to the calculation of fully diluted earnings per share?
A) An extraordinary gain or loss resulting from fire.
B) Issuance of common share.
C) Issuance of bonds that can be converted to common shares.
D) Issuance of participating and cumulative preferred shares.

Question

Quizplus · Accepted Answer

The issuance of bonds that can be converted to common shares is unique to the calculation of fully diluted earnings per share because if these bonds are converted to common shares, it would increase the number of outstanding shares and potentially dilute the earnings per share. The other events listed do not necessarily affect the number of outstanding shares, and therefore do not impact fully diluted earnings per share.

Which of the Following Events Is Unique to the Calculation