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Under Ind AS 33, when calculating DILUTED EPS, options and warrants are treated using the TREASURY STOCK method, meaning:
AOnly options exercised in the year are considered
BAll shares under option are added to the share count at par value
CAssumed proceeds from exercise are deemed used to buy back shares at the AVERAGE market price; only the residual (free) shares dilute
DAll option shares are dilutive at face value
Answer & Solution
Correct answer: C. Assumed proceeds from exercise are deemed used to buy back shares at the AVERAGE market price; only the residual (free) shares dilute
Treasury-stock method: assume option exercise at the exercise price → proceeds buy shares at average market price → the difference (the 'free' shares) is added to the denominator. The 'paid' shares are deemed fairly priced and ignored.
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