1 The objective of this Standard is to prescribe principles for the determination and presentation of earnings per share, so as to improve performance comparisons between different entities in the same reporting period and between different reporting periods for the same entity. Even though earnings per share data have limitations because of the different accounting policies that may be used for determining ‘earnings’, a consistently determined denominator enhances financial reporting. The focus of this Standard is on the denominator … Continue reading
Basic earnings per share
9 An entity shall calculate basic earnings per share amounts for profit or loss attributable to ordinary equity holders of the parent entity and, if presented, profit or loss from continuing operations attributable to those equity holders.
10 Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period.
11 … Continue reading
64 If the number of ordinary or potential ordinary shares outstanding increases as a result of a capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the calculation of basic and diluted earnings per share for all periods presented shall be adjusted retrospectively. If these changes occur after the reporting period but before the financial statements are authorised for issue, the per share calculations for those and any prior period financial statements presented … Continue reading
66 An entity shall present in the statement of comprehensive income basic and diluted earnings per share for profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity and for profit or loss attributable to the ordinary equity holders of the parent entity for the period for each class of ordinary shares that has a different right to share in profit for the period. An entity shall present basic and diluted earnings per share … Continue reading
70 An entity shall disclose the following:
- the amounts used as the numerators in calculating basic and diluted earnings per share, and a reconciliation of those amounts to profit or loss attributable to the parent entity for the period. The reconciliation shall include the individual effect of each class of instruments that affects earnings per share.
- the weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share, and a reconciliation of these
… Continue reading
Appendix A Application guidance
This appendix is an integral part of the Standard.
Profit or loss attributable to the parent entity
A1 For the purpose of calculating earnings per share based on the consolidated financial statements, profit or loss attributable to the parent entity refers to profit or loss of the consolidated entity after adjusting for non-controlling interests.
A2 The issue of ordinary shares at the time of exercise or conversion of potential ordinary shares does not … Continue reading
These examples accompany, but are not part of, IAS 33.
Example 1 Increasing rate preference shares
Reference: IAS 33, paragraphs 12 and 15
Entity D issued non-convertible, non-redeemable class A cumulative preference shares of CU100 par value on 1 January 20X1. The class A preference shares are entitled to a cumulative annual dividend of CU7 per share starting in 20X4.
At the time of issue, the market rate dividend yield on the class A preference shares was 7 … Continue reading
Example 2 Weighted average number of ordinary shares
Reference: IAS 33, paragraphs 19-21
1 January 20X1
Balance at beginning of year
31 May 20X1
Issue of new shares for cash
1 December 20X1
Purchase of treasury shares for cash
31 December 20X1
Balance at year-end
Calculation of weighted average:
(1,700 x 5/12) + (2,500 x 6/12) + (2,250 x 1/12) = … Continue reading
Example 3 Bonus issue
Reference: IAS 33, paragraphs 26, 27(a) and 28
Profit attributable to ordinary equity holders of the parent entity 20X0
Profit attributable to ordinary equity holders of the parent entity 20X1
Ordinary shares outstanding until 30 September 20X1
Bonus issue 1 October 20X1
2 ordinary shares for each ordinary share outstanding at 30 September 20X1 200 x 2 = 400
|Basic earnings per share 20X1|| CU600||= CU1.00|
|(200 + 400)|
|Basic earnings per|
… Continue reading
Example 4 Rights issue
Reference: IAS 33, paragraphs 26, 27(b) and A2
Profit attributable to ordinary equity holders of the parent entity
Shares outstanding before rights issue
One new share for each five outstanding
shares (100 new shares total)Exercise price: CU5.00
Date of rights issue: 1 January 20X1
Last date to exercise rights: 1 March 20X1
Market price of one ordinary share immediately before exercise on 1 March 20X1:
… Continue reading