Interest expense on convertible bonds that are dilutive is included in the numerator of the diluted earnings per share calculation at an amount equal to interest expense times

Question

Quizplus · Accepted Answer

Interest expense on convertible bonds is added back to the numerator of the diluted EPS calculation, but it's adjusted for taxes, hence multiplied by (1 - tax rate). This is because the interest expense is tax-deductible, reducing the company's taxable income.

Interest Expense on Convertible Bonds That Are Dilutive Is Included