Calculation of diluted eps

Kanika Maheshwari (Article Assistant) (140 Points)

29 January 2016  
A company is in the business of manufacturing textiles. It has taken a long-term debt from a bank. As per the agreement with the bank, in case the company did not pay interest or repayments on time then the bank shall have an option to convert the outstanding amount into equity shares of the company (conversion at par value). Till date the company has not made any default. Whether the loan get covered under the definition of potential equity shares and, accordingly, does the company need to disclose 'Diluted Earnings Per Share (EPS)' as required by AS 20 ?