Assume basic EPS has been determined.In determining the diluted earnings per share,the annual dividend on convertible noncumulative preferred shares,which are a dilutive convertible security,should be:

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Quizplus · Accepted Answer

The annual dividend on convertible noncumulative preferred shares, being a dilutive convertible security, must be taken into account while determining diluted EPS. Thus, it should be added back to the numerator of basic EPS only if it has been declared. If the annual dividend on these preferred shares has not been declared, it should not be added back to the numerator. Therefore, option C is the best choice.

Assume Basic EPS Has Been Determined