INDIAN ACCOUNTING STANDARD (IND AS) 33, IAS 33

EARNINGS PER SHARE

AUTHOR :CMASIVAKUMAR

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Each Accounting Standard offers wide variety of practical applications to the stakeholders in respect of full
disclosure and transparency. Therefore, I hereby try to summarize various dimensions with regard to the
following Accounting Standard.

1. The Accounting Standards related with “Earnings per Share.”

A. Ind As -33

B. IAS-33

C. AS -20

2. Differences between Ind AS 33 and IAS 33

IND AS-33 IAS -33

1. The words Approval of the financial statements for issue 1. The words Authorization of the financial statemen
have been used in the context of financial statements considered issue have been used in the context of financial statem
for the purpose of events after the reporting period. considered for the purpose of events after the reporting
2. The Ind AS 33 requires EPS related information to be 2. When an entity presents both consolidated financial
disclosed both in consolidated financial statements and separate statements and separate financial statements, it may giv
financial statements. related information in consolidated financial statement
3.Relevant terms are Statement of profit and loss and balance 3. Relevant terms are Statement of Comprehensive Inc
sheet Statement of Financial Position
4.Ind AS applicability is governed by the Companies Act and 4.Whereas IAS-33 is applicable to listed entity or entity
the Rules made thereunder. process of listing.
5.The following paragraph has been added after paragraph 12.

“Where any item of income or expense which is otherwise

required to be recognized in profit or loss in accordance with
accounting standards is debited or credited to securities 5.No such paragraph after paragraph No 12
premium account/other reserves ,the amount in respect thereof
shall be deducted from profit or loss from continuing operations
for the purpose of calculating basic earnings per share”
No Major differences between INDAS 33and IAS 33 except the above. Therefore, the following paragraphs
relate to both INDAS 33and IAS 33.

3. Objective

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.

4. Scope

a. This Indian standard shall apply to companies that have issued equity shares to which Indian
Accounting Standards notified under the companies Act apply.

b. An entity that discloses earnings per share shall calculate and disclose earnings per share in accordance
with this standard.

c. The Ind AS 33 requires EPS related information to be disclosed both in consolidated financial
statements and separate financial statements.

5. Definitions

a. Options, warrants and their equivalents are financial instruments that give the holder the right to
purchase ordinary shares.

b. An ordinary share is an equity instrument that is subordinate to all other classes of equity instruments.

c. Dilution and Anti-dilution

DILUTION ANTI-DILUTION
An reduction in EPS or an increase in LPS resulting from the An Increase in EPS or a reduction in LPS resulting from
assumption assumption

*That convertible instruments are converted *That convertible instruments are converted

*That options or warrants are exercised or *That options or warrants are exercised or

*That ordinary shares are issued upon the satisfaction of *That ordinary shares are issued upon the satisfaction of
specified condition specified condition

6. Measurement.
An entity shall present in the statement of profit and loss basic and diluted earnings per share for profit or
loss from continuing operations

A. BASIC EPS

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.

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.

a. Earnings

Earnings is calculated as follows

Profit before tax (from Continuing operations)

Less: (1) Tax

(2) Preference Dividend

(3) Tax on Preference Dividend

(4) Minority interest

Besides adjusted for the following items with the above figures

(1) Differences arising on the settlement of preference shares

Income/expense debited or credited to securities premium /other reserves

b. The weighted average number of ordinary shares outstanding (the denominator) during the period can
be calculated as follows:

Number of ordinary share outstanding at the beginning of period *Time weighting factor

Deduct Number of ordinary shares purchased * Time weighting factor

Add The weighted average number of ordinary shares outstanding during the period and for all periods
presented shall be adjusted for events, other than the conversion of potential ordinary shares, that have changed
the number of ordinary shares outstanding without a corresponding change in resources.* Time weighting
factor.

Ordinary shares may be issued, or the number of ordinary shares outstanding may be reduced, without a
corresponding change in resources.

Examples include:

(a) a capitalisation or bonus issue (sometimes referred to as a stock dividend);

(b) a bonus element in any other issue, for example a bonus element in a rights issue to existing shareholders;

(c) a share split; and

(d) a reverse share split (consolidation of shares)

c. Weights to be considered /adjusted from (The table is only indicative in nature. Uncomplete in nature)

Ordinary shares issued in exchange of cash Date of cash receivable

Shares included in weighted average from the beginning
Bonus shares
the reporting period
Shares included in weighted average from the beginning
Share split
the reporting period
Right issue Adjusted with Right factor
Purchase of treasury shares for cash From the date of purchase
Contingently issuable shares Date when all necessary conditions are satisfied

B. Diluted Earnings per Share can be calculated as follows

Diluted Earnings per Share=Profit or loss attributable to ordinary shareholders (after adjustment for
diluted earnings)/Average number of weighted ordinary shares outstanding during the period (Assuming
the conversion of diluted potential ordinary shares).

a. Diluted Earnings

Profit or loss (after tax) for the period attributable to existing ordinary shareholders of the parent entity

Add back dividend along with distribution tax on convertible preference shares previously deducted

Add back interest net of tax effect charged on convertible debenture or loans

Add/subtract any other changes in income or expense that would result from the conversion of the dilutive
potential ordinary shares.
b. Average number of weighted ordinary shares outstanding during the period

I. Number of ordinary share outstanding at the beginning of period *Time weighting factor

Deduct Number of ordinary shares purchased * Time weighting factor

Add The weighted average number of ordinary shares outstanding during the period and for all periods
presented shall be adjusted for events, other than the conversion of potential ordinary shares, that have changed
the number of ordinary shares outstanding without a corresponding change in resources.* Time weighting
factor.

Add The weighted average number of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. Dilutive potential ordinary shares shall be deemed to have been
converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential
ordinary shares.

c. Options, warrants and their equivalents

For the purpose of calculating diluted earnings per share, an entity shall assume the exercise of dilutive options
and warrants of the entity.

7. Presentation

A.An entity shall present in the statement of profit and loss 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.

B.An entity that reports a discontinued operation shall disclose the basic and diluted amounts per share for the
discontinued operation either in the statement of profit and loss or in the notes

C.An entity shall present basic and diluted earnings per share, even if the amounts are negative (loss per share)