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Ind-AS 33: Earning Per Share (Diluted EPS Adjusted EAE/Adjusted WANS…
Ind-AS 33: Earning Per Share
Basic EPS
EAE/WANS
EAE
Pref dividend to be considered
Non-cumulative - Consider if only if it has been declared by co.
Cumulative - Consider it on per annum basis whether it has been declared by co. or not
assume cumulative
Effective interest rate for computing pref dividend
CDT liability on actual payment
Premium/discount on early redemption of pref shares
to be considered as income/expense in computing EAE
EPS is disclosed on the basis of overall profits
no case of extraordinary activities
EPS for continuing, discontinued & total
business operations
Do not consider transfer to reserves,
equity dividends & retained earnings
EPS to be calculated separately for
SFS & CFS
Consider all incomes/expenses
that are routed through sec. premium in computing
EAE
WANS
No of shares o/s during the period x Period of o/s
WANS shall be reduced by buy-back of shares
from date of cancellation of shares
Shares issued in conversion of debs/loans-
Consider time factor from cessation date of accrual of interest on debs/loans
Convertible debs
Optional
always assume
Consider while computing
diluted EPS
Mandatory
Consider in basic EPS
from the date of issue of such debs
Shares issued in business combination-
Consider from acquisition date of business
Different dividend rights-
Calculate equivalent no of shares
& reconvert basic EPS for each class of shares
No. of shares x Dividend weight factor
Normal EPS x Dividend weight factor
Partly paid up shares-
Convert to fully paid up shares
Bonus shares-
Add directly to WANS & restate previous year's EPS accordingly for comparison purpose
Share Split/Consolidation-
Ignore time factor & restate for previous year
like bonus shares
Right shares
Theoretical ex-right price =(Original no of shares x Market price per share)+(No of right shares x Right issue price)/Total no of shares
RA Factor = Cum-right market price/Ex-right price
Apply RA factor on no of shares o/s during pre-right period
to convert cum-right value to ex-right value
Restate previous year's EPS accordingly
Shares issued for acquisition of assets/settlement of liabilities -
Time factor from date of recognition of assets/settlement of liabilities in books
Contingently issued shares -
Included in WANS from date of fulfillment of related condition
Diluted EPS
Adjusted EAE/Adjusted WANS
Less than basic EPS
If higher, it will be anti-dilutive EPS and not reported
ESOPS -
Include in DEPS till expiry of ESOPS
100% dilutive
Free shares = (Avg Market price during the year - Exercise price)/ Avg market price during the year x Shares promised under ESOP
Diluted EPS = (EAE + 0)/(WANS + Free shares)
Loss making co.-
DEPS is reported if loss per share increases in future
Share warrants
100% dilutive
Free shares = (Avg Market price during the year - Locked price)/ Avg market price during the year x Warrants
Diluted EPS = (EAE + 0)/(WANS + Free shares)
Share app. money pending allotment
Separate bank a/c
ignore for DEPS
Already used in business
No of shares which are to be issued in future should be taken as potential shares
Diluted EPS = (EAE + 0)/(WANS + Free shares)
100% dilutive
Time factor to be used in computing WANS for DEPS
Call Options
Co. should be option seller
Option contract should be co's own shares
MP should be higher than exercise price
Put Options
Co. should be option seller
Option contract should be co's own shares
MP should be lower than exercise price
Contingently Issuable Shares
to be considered if these promises have been fulfilled by co.
Potential shares issued by subsidiary co
consider in DEPS of CFS
Disclosures
Disclose EPS in SOPL in 3 headings
Continuing operations
Discontinued operations
Overall EPS
Notes to Accounts
Recon. between earnings used in BEPS & DEPS
Recon. between WANS used in BEPS & DEPS
No of anti-dilutive potential equity shares not considered