@mclkt Yeah I figured that is the case. The Becker SIM asked the following:
“What is the treatment of purchased put options in the computation of diluted EPS? Find the proper citation that provides guidance to answer this question.”
Becker's Answer: ASC 260-10-45-22 which states “The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include nonvested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Antidilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS.”
My Answer: ASC 260-10-45-37 which states “Contracts such as purchased put options and purchased call options (options held by the entity on its own stock) shall not be included in the computation of diluted EPS because including them would be antidilutive. That is, the put option would be exercised only when the exercise price is higher than the market price and the call option would be exercised only when the exercise price is lower than the market price; in both instances, the effect would be antidilutive under both the treasury stock method and the reverse treasury stock method, respectively.”
So by a better answer do we mean the one with the least amount of detail? I would argue that the citation I found is a better answer since it explains the treatment and the reasoning behind the treatment.
I guess I'm overthinking this, but I don't want to get these easy ones wrong.