For the Purposes of Calculating Diluted Earnings Per Share, an Entity

question 8

Multiple Choice

For the purposes of calculating diluted earnings per share, an entity shall adjust the profit attributable to ordinary shareholders by the after-tax effect of the following item(s) related to dilutive potential ordinary shares:

• A) dividends only.
• B) interest only.
• C) other income or expenses only.
• D) dividends, interest, other income or expenses.

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Definitions:

Taxable Income

Income of an individual or corporation subject to tax by governmental authorities.

Financial Income

Income generated through investments or other financial instruments, distinct from operational or business income.

Deferred Tax Asset

An accounting term representing taxes that have been overpaid or deferred for future periods, potentially reducing future tax liabilities.

Pretax Accounting Income

The income of a business before any tax is deducted, often used in financial reporting and analysis.