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

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?
A) Basic earnings per share only
B) Diluted earnings per share only
C) Both basic and diluted earnings per share
D) Neither basic nor diluted earnings per share

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

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 102
Topic #: 2
[All CIMAPRA19-F02-1 Questions]

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?

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Suggested Answer: A

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

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Margo
9 months ago
I'm not convinced they need to show both, what's the point?
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Vanda
10 months ago
Companies usually disclose both basic and diluted EPS.
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Elmira
10 months ago
Wait, why would they not disclose diluted EPS? Seems odd.
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Lai
10 months ago
Totally agree, both should be shown for clarity!
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Avery
10 months ago
The basic EPS is 2, and diluted is 2.2. They should disclose both.
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Hobert
10 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
11 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
11 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
11 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
11 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
11 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
11 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
11 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
2 years 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
2 years ago
C) Both basic and diluted earnings per share
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Jani
2 years ago
B) Diluted earnings per share only
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Allene
2 years ago
A) Basic earnings per share only
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Claudio
2 years 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
2 years ago
It's better to provide a complete picture for investors to make informed decisions.
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Jolanda
2 years ago
Yeah, disclosing both basic and diluted EPS is important for transparency.
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Jerlene
2 years ago
I agree, investors need to have all the information.
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Wilburn
2 years 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
2 years 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
2 years ago
C) Both basic and diluted earnings per share
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Kristel
2 years ago
C) Both basic and diluted earnings per share
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Tori
2 years ago
B) Diluted earnings per share only
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Margarita
2 years ago
A) Basic earnings per share only
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Oneida
2 years 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
2 years 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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Graciela
2 years ago
That way they can make informed decisions.
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Maryln
2 years ago
Exactly, transparency is key in financial reporting.
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Davida
2 years ago
It's important to provide investors with all relevant information.
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Hildegarde
2 years ago
Yes, the company should disclose both basic and diluted earnings per share.
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Rozella
2 years ago
I think the company should disclose both basic and diluted earnings per share.
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