What might be the impact on eps

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Entity B has invested in two types of equity investments in listed entities that it does not control. They are treated differently in the financial statements. One of the notes to the financial statements says that the equity investments Entity B holds to invest surplus cash balances are measured at fair value and that changes in fair value are recognised in profit or loss. Another note says that the equity investments it holds in a key supplier are measured at fair value and that changes in fair value are recognised in other comprehensive income (OCI).

Question 1: Earnings per share (EPS) is a key performance indicator. Explain how it can be justified to use two different treatments for equity investments made by the same entity. What might be the impact on EPS if a gain or loss is reported in OCI rather than profit or loss.

Reference no: EM132569268

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