IAS 33 Objective Scope Definitions

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Objective Scope Definitions

IAS 33 Objective Scope Definitions

Objective

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 of the earnings per share calculation.

Scope

2 This Standard shall apply to

  1. the separate or individual financial statements of an entity:
    1. whose ordinary
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IAS 33 Measurement

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Measurement

IAS 33 Measurement

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 The objective of basic earnings per share information is to provide a measure of the interests of each ordinary share of a parent entity in the … Read more

IAS 33 Retrospective adjustments

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Retrospective adjustments

IAS 33 Retrospective adjustments

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 shall be based on the new number of shares.

The fact that per share calculations reflect such changes in the number of shares shall be … Read more

IAS 33 Presentation

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Presentation

IAS 33 Presentation

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 with equal prominence for all periods presented.

67 Earnings per share is presented for every period for which a statement of comprehensive income is presented. If … Read more

IAS 33 Disclosure

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Disclosure

IAS 33 Disclosure

70 An entity shall disclose the following:

  1. 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.
  2. the weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share, and a reconciliation of these denominators to each other. The reconciliation shall include the individual effect of each class of instruments that affects earnings per share.
  3. instruments (including contingently issuable shares)
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IAS 33 Application guidance EPS

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Application guidance EPS

IAS 33 Application guidance EPS

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.

Rights issues

A2 The issue of ordinary shares at the time of exercise or conversion of potential ordinary shares does not usually give rise to a bonus element. This is because the potential ordinary shares are usually issued for fair value, resulting in a proportionate change … Read more

IAS 33 Increasing rate preference shares

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Increasing rate preference shares

IAS 33 Increasing rate preference shares

Illustrative examples

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 per cent a year. Thus, Entity D could have expected to receive proceeds of approximately CU100 per class A preference share if the … Read more

IAS 33 Weighting shares in a period

Last Updated on 07/02/2020 by 75385885

IAS 33 Earnings per ShareIAS 33 Weighting shares in a period

IAS 33 Weighting shares in a period

Example 2 Weighted average number of ordinary shares

Reference: IAS 33, paragraphs 19-21

Shares issued

Treasury  shares

Shares outstanding

1 January 20X1

Balance at beginning of year

2,000

300

1,700

31 May 20X1

Issue of new shares for cash

800

0

2,500

1 December 20X1

Purchase of Read more

IAS 33 Share options and diluted earnings

Last Updated on 07/02/2020 by 75385885

IAS 33 Share options and diluted earnings

Example 5 Effects of share options on diluted earnings per share

Reference: IAS 33, paragraphs 45-47

Profit attributable to ordinary equity holders of the parent entity for year 20X1

CU1,200,000

Weighted average number of ordinary shares outstanding during year 20X1

500,000 shares

Average market price of one ordinary share during year 20X1

CU20.00

Weighted average number of shares under option during year 20X1

100,000 shares

Exercise price for shares under option during year 20X1

CU15.00

Calculation of earnings per share

Earnings

Shares

Per share

Profit attributable to ordinary equity holders of the parent entity for year 20X1

CU1,200,000

Weighted average shares outstanding during year 20X1

500,000

Basic

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IAS 33 Convertible bonds

Last Updated on 07/02/2020 by 75385885

IAS 33 Convertible bonds

Example 6 Convertible bonds

Reference: IAS 33, paragraphs 33, 34, 36 and 49

Profit attributable to ordinary equity holders of the parent entity

CU1,004

Ordinary shares outstanding

1,000

Basic earnings per share

CU1.00

Convertible bonds

100

Each block of 10 bonds is convertible into three ordinary shares

Interest expense for the current year relating to the liability component of the convertible bonds

CU10

Current and deferred tax relating to that interest expense

CU4

Note: the interest expense includes amortisation of the discount arising on initial recognition of the liability component (see IAS 32 Financial Instruments: Presentation).

Adjusted profit attributable to ordinary equity holders of the parent entity

CU1,004 + CU10-

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