Question 2
An increase in earnings per share or a reduction in loss per share resulting from the assumption that convertible instruments are converted, that options or warrants are exercised, or that ordinary shares are issued upon the satisfaction of specified conditions is the definition of which terms below?
Antidilution
Contingent agreement
Put options
The term that describes an increase in earnings per share or a decrease in loss per share resulting from the assumption that convertible instruments are converted, options or warrants are exercised, or ordinary shares are issued upon meeting certain conditions is called "Dilutive potential common shares" or "Dilutive effect." This refers to the situation where the calculation of diluted earnings per share takes into account the potential impact of these convertible securities on the entity's equity structure, which can have the effect of reducing (or diluting) the earnings per share for existing shareholders.
