Earnings per share

The objective of IAS 33 Earnings per share is prescribing 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.

Earnings per share is mostly used in the consolidated financial statements of a group with a parent:

  1. whose ordinary shares or potential ordinary shares are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
  2. that files, or is in the process of filing, its financial statements with a securities commission or other regulatory organization for the purpose of issuing ordinary shares in a public market.
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Repurchase options and residual value guarantees

Original Equipment Manufacturers (OEMs) may have a right or obligation to repurchase vehicles as part of a contract with a customer or may provide residual value guarantees to certain customers. Examples include repurchase options on sales of fleet vehicles or residual value guarantees to fleet customers or third-party purchasers of vehicles (e.g., finance companies). While the economics of a repurchase agreement and a residual value guarantee may be similar, the accounting outcome could be quite different under IFRS 15.

Repurchase agreements Repurchase options and residual value guarantees

Some agreements include repurchase provisions, either as part of the original sales contract or as a separate contract that relates to the original sales contract. These provisions affect how an entity applies the … Read more

Share-based Payment

In summary

The basic accounting for share-based payments for remuneration is quite simple – expense an amount over a vesting period. The main difficulties are associated with (a) determining a reliable fair value for the instrument, and (b) determining a reasonable estimate of the number of instruments that will not lapse during the vesting period. The former, fair value, is bound up in some reasonably sophisticated valuation procedures. The latter is a management-derived estimate that will depend upon internal judgments on a year-by-year basis, although by the end of the vesting period one will know how many options will vest. The determination of the fair value will be the more difficult aspect.

In essence, IFRS 2 Share-based Payment deals Read more