The Treasury Stock Method is used to calculate the net increase in shares outstanding if in-the-money options and other dilutive securities were to be exercised. If the exercise price is larger than the current share price, the options are considered out of the money and there won't be any dilution.The diluted portion is calculated as follows:
Learn Treasury Stock Method with interactive examples and practice exercises in our Income Statement module.
This interactive learning module helps you understand Treasury Stock Method through hands-on practice and real-world examples.