Antidilutive securities: If the effect of the conversion or exercise of potential common shares would be to increase, rather than decrease. Ignored when calculating both basic and diluted EPS.
The treasury stock method is used to incorporate the dilutive effect of stock options, stock warrants, and similar securities.
For this method, “proceeds” include:
The amount, if any, received from the hypothetical exercise of options or vesting of restricted stock.
The total compensation from the award that’s not yet expensed.
Contingently issuable shares are considered outstanding in the computation of diluted EPS when they will later be issued upon the mere passage of time or because of conditions that currently are met.
EPS data (both basic and diluted) must be reported for (a) income before any discontinued operations, (b) the discontinued operations, and (c) net income. Disclosures also should include a reconciliation of the numerator and denominator used in the computations.
When options have graded vesting, unlike under U.S. GAAP, IFRS does not permit the straight-line method for allocating compensation or require that the company recognize at least the amount of the award that has vested by each reporting date. The earnings per share requirements of lFRS and U.S. GAAP are similar. The few differences that remain are the result of differences in the application or the treasury stock method, the treatment of contracts that may be settled in shares or cash, and contingently issuable shares.