CIMAPRA19-F02-1 Exam - Topic 2 Question 102 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 102
Topic #: 2

The basic earning per share computed by a company for year ended 31st March 20X7 is 2 per share. The company had certain convertible debentures outstanding as on 31st March 20X7. The conversion of debentures to equity shares would result in the earnings per share to be 2.2. Which of the following should the company disclose?

ABasic earnings per share only

BDiluted earnings per share only

CBoth basic and diluted earnings per share

DNeither basic nor diluted earnings per share

Show Suggested Answer

Suggested Answer: A

by Mertie at Oct 21, 2024, 09:55 AM

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Margo

3 months ago

I'm not convinced they need to show both, what's the point?

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Vanda

3 months ago

Companies usually disclose both basic and diluted EPS.

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Elmira

3 months ago

Wait, why would they not disclose diluted EPS? Seems odd.

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Lai

4 months ago

Totally agree, both should be shown for clarity!

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Avery

4 months ago

The basic EPS is 2, and diluted is 2.2. They should disclose both.

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Hobert

4 months ago

I feel like I might be mixing up the requirements, but I think they have to disclose diluted EPS if it’s higher than basic. So, maybe C is correct?

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Glory

4 months ago

This seems similar to a practice question we did on EPS disclosures. I think the answer is C, but I need to double-check the rules on convertible debentures.

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Fatima

4 months ago

I'm not entirely sure, but I think if the diluted EPS is higher, they might need to show both to give a clearer picture to investors.

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Val

5 months ago

I remember we discussed that companies usually disclose both basic and diluted EPS when there are convertible securities involved.

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Oneida

5 months ago

This is a tricky one, but I think the key is understanding the concept of diluted earnings per share. Since the company has convertible debentures, they need to show the impact on EPS if those debentures were converted. That's why they need to disclose both the basic and diluted EPS.

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Steffanie

5 months ago

Okay, I think I've got it. The company has convertible debentures outstanding, and the conversion of those debentures would result in a higher EPS. So the company needs to disclose both the basic EPS and the diluted EPS to provide a complete picture of their earnings per share.

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Kati

5 months ago

Hmm, I'm a bit confused here. The basic EPS is 2 per share, and the diluted EPS is 2.2 per share. I'm not sure why the company would need to disclose both, since the diluted EPS is higher. Let me think this through a bit more.

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Theola

5 months ago

This seems pretty straightforward. The question is asking what the company should disclose based on the information provided, and the answer is clearly option C - both basic and diluted earnings per share.

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Jamal

1 year ago

Haha, who even needs earnings per share? I just invest based on my gut feeling and the company's snack selection in the break room.

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Julianna

1 year ago

C) Both basic and diluted earnings per share

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Jani

1 year ago

B) Diluted earnings per share only

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Allene

1 year ago

A) Basic earnings per share only

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Claudio

1 year ago

Nah, that's not enough. Investors need to know the full picture. Gotta go with option C, both basic and diluted EPS.

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Osvaldo

1 year ago

It's better to provide a complete picture for investors to make informed decisions.

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Jolanda

1 year ago

Yeah, disclosing both basic and diluted EPS is important for transparency.

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Jerlene

1 year ago

I agree, investors need to have all the information.

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Wilburn

1 year ago

Hold up, what if the company wants to keep it simple and just report the basic EPS? That would be option A, right?

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Cyril

1 year ago

Yup, I agree. Diluted EPS is important for investors to understand the potential impact of convertible securities on the company's earnings.

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Emerson

1 year ago

C) Both basic and diluted earnings per share

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Kristel

1 year ago

C) Both basic and diluted earnings per share

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Tori

1 year ago

B) Diluted earnings per share only

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Margarita

1 year ago

A) Basic earnings per share only

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Oneida

1 year ago

I agree with Rozella. It's important for investors to have a complete picture of the company's financial performance.

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Malcom

1 year ago

Hmm, this seems pretty straightforward. If the conversion of debentures results in a higher EPS, the company should disclose both basic and diluted EPS, right?

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