Which statement is correct about the "if-converted" method for EPS?
A)This method assumes the convertible security is converted into ordinary shares at the end of the fiscal period.
B)This method assumes the convertible security is converted into ordinary shares at the beginning of the fiscal period.
C)This method assumes the convertible security is converted into ordinary shares evenly over the fiscal period.
D)This method assumes the convertible security is converted into ordinary shares at the mid-point of the fiscal period.

Question

Quizplus · Accepted Answer

The "if-converted" method assumes that the convertible security is converted into ordinary shares at the beginning of the fiscal period, or at the time of issuance if the security was issued during the period. This approach is used to calculate diluted earnings per share (EPS) by assuming all convertible securities were converted to shares at the start of the period.

Which Statement Is Correct About the "If-Converted" Method for EPS