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As-20 ca final

govinda (student) (90 Points)

14 March 2018

Incase of convertible Debentures why we are not considering it in Basic Eps calculation?? I got same in pm. If converted Date is not provided it is not considered in Basic Eps?? What is the SEBI Rule

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6 Replies

Divakar (Student CA Final ) (11857 Points)
Replied 14 March 2018

In sebi rule it is considered... Please refer RTP questions

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govinda (student) (90 Points)
Replied 14 March 2018

It is considered in Basic Eps only if Conversion Date is provided as per my knowledge but i want to knw the concept. It is considered only for Diluted Eps if conversion date is not provided.

Divakar (Student CA Final ) (11857 Points)
Replied 14 March 2018

Plz refer sebi rules and RTP questions... Already told u that... Convertible securities is considered in bonus issue....

Divakar (Student CA Final ) (11857 Points)
Replied 14 March 2018

Why convertible debentures should be included in basic EPS... it is considered in dilutive EPS... NO RELEVANCE of ur query

Divakar (Student CA Final ) (11857 Points)
Replied 14 March 2018

Convertible securities is dilutive in nature

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satish (teaching) (2046 Points)
Replied 14 March 2018

convertinle denemture are nothing but prospective equity shares. right now no euity shares from convertible debentures.

so while calculation of basic EPS should not be consider the convetible debentures. if convertion happens before closing the financial year, we should consider (because of by the end of the year debenture were conveted as equity shares)

where as IN diluted EPS, convertion was not done by ending of financial year these convetible debentures are prospective shares.

Basic EPS = PAES / WANES

when convertion occurs no increase in resources of the entity. so same earning will get in future.

but number of equity shares will increase ( because of convertion)

so in future Our Basic EPS will get diluted (because of convertion of debentures)

while calculation of diluted EPS we should consider all the chances to allot future equity shares. (like convetible debentures and convertible preference shares etc....)