CAF-6 · Chapter 11 · Question 3 of 15
If an entity has multiple potential ordinary shares, in what order should they be considered when calculating diluted EPS?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) From the most dilutive to the least dilutive.
Explanation
To maximize the dilution effect, potential ordinary shares must be ranked and included in the calculation in order from the most dilutive to the least dilutive.
More IAS 33 Earnings per share MCQs
- Q5Which of the following is considered a 'potential ordinary share'?
- Q6When calculating the weighted average number of shares, when are shares issued for cash generally included?
- Q7In a rights issue, the exercise price is often lower than the fair value of the shares. How does this affect the EPS calculation?
- Q8If a potential ordinary share increases the EPS when converted, it is known as:
- Q9According to IAS 33, what must an entity do if a potential ordinary share is anti-dilutive?