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Antidilution belongs in a reconciled numerator-and-denominator workpaper. Antidilution excludes a potential common-share effect when including it would increase EPS or reduce loss per share under the control-number test. Compare the running result before and after each ordered instrument.
Apply it
If the running diluted EPS is $2.40 and the next convertible issue would produce $2.46, the issue is antidilutive and is excluded. Keep its potential shares and exclusion reason in the disclosure inventory.
Review antidilution against eps control number. Reconcile antidilution to diluted eps ordering, the dated antidilution evidence, and its final presentation.
The antidilution record ties eps control number to its source date, measured amount, and diluted eps ordering effect.
Keep the boundary clear
An instrument can change from dilutive to antidilutive between periods or after other instruments are included. Exclusion is a period-specific calculation result, not a permanent classification.
Authority
Read ASC 260-10-45-17 for the prohibition on antidilutive assumptions.
Put the concept to work
Apply this concept
- Explain and apply antidilution within a reconciled numerator-and-denominator workpaper using supplied authoritative facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- EPS control number — Apply
To apply this concept: Required. This earlier step supplies an input required by the EPS workpaper.