Equity contracts always have a zero numerator effect. The Treasury Stock method is used to determine the denominator effect of equity contracts. There will be a dilutive effect on EPS whenever the market price at which we make the assumed repurchase is greater than the option price. The If Converted Method is used to determine the numerator and denominator effect of convertible securities. The convertible securities are assumed to be converted as of the beginning of the period or the issue date, if issued during the period.
Interest expense includes adjustments for premium or discount amortization.
Dividends on convertible preferred stock would not be deducted from income in the EPS numerator. E20-13 D. Contingently Issuable Shares are shares of common stock that will be issued when some specified future event occurs. Order of entry into EPS calculations when there are several dilutive securities. When this point is reached, that security and any others remaining on the list are excluded from EPS because they are antidilutive. The following information is available for Palmetto Corporation for the year ended December 31, 1998.