Indicate which of the following securities would be included in the computation
ID: 2532368 • Letter: I
Question
Indicate which of the following securities would be included in the computation of "basic earnings per share," and which would be included in the computation of "diluted earnings per share." Choose "B" for those which affect only basic EPS, a "D" for those which affect only diluted EPS, "BD" for those which affect both basic and diluted EPS, and an "N" for those securities which do not affect EPS computations. Assume that, where applicable, the appropriate securities are dilutive.
1. _____ Warrants to purchase additional common shares.
2. _____ Common Stock
3. _____ Nonconvertible debenture bonds.
4. _____ Convertible, noncumulative preferred stock.
5. _____ Cumulative, nonconvertible preferred stock.
6. _____ Convertible bonds.
7. _____ Executive stock options.
8. _____ Notes payable
Explanation / Answer
"B" for those which affect only basic EPS, a "D" for those which affect only diluted EPS, "BD" for those which affect both basic and diluted EPS, and an "N" for those securities which do not affect EPS computations
1. B
2. B,D
3. N
4. D
5. D,B
6. D
7. D
8. N