For the current year,Voque Company reported basic earnings per share of $8 and diluted earnings per share of $3.The difference between these figures is attributable to outstanding shares of convertible p

Question

Quizplus · Accepted Answer

The difference between basic earnings per share and diluted earnings per share is caused by the potential dilution of outstanding convertible securities such as convertible bonds, preferred stock, or stock options. The dilution happens because these securities can be converted into common stock, which would increase the number of outstanding shares and reduce earnings per share. In this case, the dilution amounted to $5 ($8 - $3 = $5). Since the question asks what part of the difference is attributable to outstanding shares of convertible securities, the answer is $3, which is the diluted EPS after accounting for dilution from convertible securities. The other $5 in dilution may be caused by other factors, such as stock options or warrants.

For the Current Year,Voque Company Reported Basic Earnings Per Share