A Subsidiary Has Dilutive Securities Outstanding That Include Convertible Bonds

question 7

Multiple Choice

A subsidiary has dilutive securities outstanding that include convertible bonds payable.The bonds are convertible into the parent's common stock.When calculating consolidated diluted earnings per share,the convertible bonds will affect

• A)the numerator of consolidated diluted EPS only.
• B)the denominator of consolidated diluted EPS only.
• C)the numerator and denominator of consolidated diluted EPS.
• D)None of the above will be affected.

---

Definitions:

Intragroup Transaction

Financial transactions that occur between two entities within the same group, not affecting the financial position of the group as a whole when consolidated.

NCI Adjustment

An adjustment in consolidated financial statements to reflect the share of equity interest that is not owned by the parent company's shareholders.

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained by the company for reinvestment in its operations, rather than being distributed to its shareholders as dividends.

Tax Rate

The percentage at which an individual or corporation is taxed.