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Convertible 8% loan stock ₹12,50,000 (₹100 each) issued 1 Oct 20X1; conversion rates from 30 Jun 20X6: 135, 130, 125, 120 shares per ₹100. The maximum possible dilution for diluted EPS uses the MOST ADVANTAGEOUS rate, which is:
AAverage of all four rates
B120 shares per ₹100 (the lowest)
CThe rate on the reporting date
D135 shares per ₹100 (the highest)
Answer & Solution
Correct answer: D. 135 shares per ₹100 (the highest)
Ind AS 33 requires the MOST ADVANTAGEOUS rate from the HOLDER's perspective — i.e. the highest conversion ratio (most shares per unit of debt). So 135 shares per ₹100 is used to compute maximum potential dilution: 12,500 × 135 = 16,87,500 shares.
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