In Applying the Treasury Stock Method to Determine the Dilutive

question 58

Multiple Choice

In applying the treasury stock method to determine the dilutive effect of options and warrants, the proceeds assumed to be received upon exercise of the options and warrants

• A) are used to calculate the number of common shares repurchased at the average market price, when calculating diluted earnings per share.
• B) are added, net of tax, to the numerator of the calculation for diluted earnings per share.
• C) are disregarded in the calculation of earnings per share if the exercise price of the options and warrants is less than the ending market price of common shares.
• D) are not included in the calculation.

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