Financial Reporting · Ind AS 33 Earnings per Share

Ind AS 33 Objective, Scope and Definitions

Updated 5 October 2026 · Fact-checked

Ind AS 33 prescribes how to determine and present earnings per share so that entities can be compared across periods. It applies to entities whose ordinary shares or potential ordinary shares are traded in a public market, or that are filing to issue them. To solve questions, test scope first, then classify each instrument as ordinary or potential ordinary.

Understand Ind AS 33 Objective, Scope and Definitions

EPS tells an ordinary shareholder how much profit is attributable to each ordinary share. Ind AS 33 does not decide how profit is measured. It fixes the denominator and the method, so that EPS of different entities and different years can be compared on the same basis.

The objective is to prescribe principles for determining and presenting EPS, with a focus on the denominator. The numerator comes from profit or loss attributable to ordinary equity holders of the parent.

Scope. The standard applies to entities 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). It also applies to an entity that files, or is in the process of filing, its financial statements with a securities commission or other regulatory body to issue ordinary shares in a public market. An entity that is not required to present EPS but chooses to do so must follow the standard in full.

Consolidated and separate statements. If an entity presents both consolidated and separate financial statements, EPS information is required only on the basis of the consolidated figures. Presenting EPS based on the separate statements is optional. If the entity chooses to do so, it shows that EPS only in its separate statement of profit and loss, never in the consolidated statements. Where the parent is the entity that is within scope, the consolidated EPS is based on the parent's ordinary shares and the profit attributable to the parent's owners.

Key definitions. An ordinary share is an equity instrument that is subordinate to all other classes of equity instruments. A potential ordinary share is a financial instrument or other contract that may entitle its holder to ordinary shares. Examples are convertible debt, convertible preference shares, options and warrants, employee plans and share-based payment arrangements, and contingently issuable shares. Options, warrants and their equivalents are financial instruments that give the holder the right to purchase ordinary shares. Contingently issuable ordinary shares are ordinary shares issuable for little or no cash or other consideration upon satisfaction of conditions in a contingent share agreement. A contingent share agreement is an agreement to issue shares dependent on the satisfaction of specified conditions. Dilution is a reduction in EPS, or an increase in loss per share, from assuming that convertible instruments are converted, options or warrants are exercised, or shares are issued on satisfaction of conditions. Antidilution is the opposite, an increase in EPS or a reduction in loss per share.

Preference shares and the numerator. Non-convertible preference shares classified as equity are not ordinary shares and not potential ordinary shares. Their post-tax dividends are deducted from profit in arriving at the numerator: for non-cumulative preference shares only if declared, and for cumulative preference shares whether or not declared. Preference shares classified as liabilities under Ind AS 32 have their dividends and other finance cost recognised in profit or loss, so they already reduce profit.

Key rules to remember

Scope test: Ind AS 33 applies if: ordinary shares or potential ordinary shares are publicly traded, OR the entity is filing to issue them in a public market; An entity outside scope that voluntarily presents EPS must comply fully with Ind AS 33.
Basic EPS (preview): Basic EPS = Profit or loss attributable to ordinary equity holders of the parent ÷ Weighted average number of ordinary shares outstanding; Detailed rules sit in the basic EPS topic. Here you only need to see how the definitions feed the denominator.
Consolidated vs separate: Both sets presented: EPS required on consolidated basis; separate-basis EPS is optional and, if shown, only in the separate statement of profit and loss; Never present separate-basis EPS in the consolidated statements.
Ordinary share: Ordinary share = equity instrument subordinate to all other classes of equity; Preference shares are not ordinary shares. Post-tax preference dividends are deducted from the numerator: non-cumulative only if declared, cumulative whether or not declared. For preference shares classified as liabilities, dividends are finance cost in profit or loss.
Potential ordinary share: Potential ordinary share = instrument that may entitle its holder to ordinary shares; Includes convertibles, options, warrants, share-based payments and contingently issuable shares. Used for diluted EPS.

How to solve Ind AS 33 Objective, Scope and Definitions questions

Use this order for any scope or definition question, whether it is a case MCQ or a short written answer.

1Read the facts and identify the entity. Is it listed, or filing to list its ordinary shares or potential ordinary shares in a public market?
2If it is not within the scope, state that Ind AS 33 is not mandatory, but that if the entity chooses to present EPS it must comply fully.
3Check whether the entity presents both consolidated and separate statements. If yes, EPS is required on the consolidated basis, and separate-basis EPS is optional and may appear only in the separate statement.
4Classify each instrument. Subordinate to all other equity means ordinary share. A right or contract to get ordinary shares later means potential ordinary share.
5For each potential ordinary share, name its type: convertible, option or warrant, share-based payment, or contingently issuable.
6Link the classification to the effect: ordinary shares go into basic EPS, potential ordinary shares are tested for diluted EPS.
7Write the conclusion in provision, facts and conclusion form.

Quickest way: Two-question screen

When to use it: Use this for case MCQs where you have about two minutes.

Question 1: Are shares or potential shares publicly traded, or is a public issue being filed? Yes means in scope.
Question 2: For each instrument, is it the most junior equity (ordinary), or does it give a right to get ordinary shares (potential)?
If the entity has consolidated and separate statements, pick the consolidated EPS as the mandatory one.
Eliminate options that say EPS is shown in consolidated statements based on separate figures, or that treat convertibles as ordinary shares today.

Common mistakes in Ind AS 33 Objective, Scope and Definitions

Saying Ind AS 33 applies to every company that follows Ind AS.
Students link Ind AS applicability with EPS applicability.
Fix: Ind AS 33 scope depends on public trading or a public issue filing. An unlisted Ind AS company is outside it unless it chooses to present EPS.
Presenting EPS on separate figures in the consolidated statements.
Students treat the parent's own shares as enough and ignore the placement rule.
Fix: Consolidated EPS is required. Separate-basis EPS is optional and, if shown, goes only in the separate statement of profit and loss.
Counting convertible debentures or options as ordinary shares in basic EPS.
Confusion between a right to shares and actual shares.
Fix: They are potential ordinary shares. They enter only diluted EPS, and only if dilutive.
Treating all preference shares as potential ordinary shares.
Students remember that convertible preference shares are potential ordinary shares and overgeneralise.
Fix: Only convertible preference shares qualify as potential ordinary shares. Non-convertible ones do not. Their post-tax dividends are deducted from the numerator: for non-cumulative shares only if declared, for cumulative shares whether or not declared. If the shares are classified as liabilities, the dividend is already finance cost in profit or loss.
Calling contingently issuable shares ones issued for full cash consideration.
The word contingent is misread and the consideration condition is missed.
Fix: They are shares issuable for little or no cash or other consideration once conditions in a contingent share agreement are met.

Worked examples

Example 1

Alpha Ltd is a listed company that prepares both consolidated and separate financial statements under Ind AS. The CFO proposes to show EPS in the consolidated statements using Alpha's separate profit. Advise on the correct presentation.

Show the solution

Provision: Ind AS 33 applies to an entity whose ordinary shares are publicly traded. Alpha is listed, so it is in scope.
Provision: where an entity presents both consolidated and separate statements, EPS is required only on the basis of the consolidated figures.
Facts: the CFO uses Alpha's separate profit in the consolidated statements. This is wrong because consolidated EPS must use profit attributable to the owners of the parent from the consolidated figures.
Provision: presenting separate-basis EPS is optional. If the entity chooses to present it, it shows it only in the separate statement of profit and loss, never in the consolidated statements.
Conclusion: Alpha must present EPS in the consolidated statements based on consolidated figures. It may, but need not, show separate-basis EPS in the separate statement of profit and loss.

Answer: Alpha must present consolidated EPS using consolidated profit attributable to its owners. Separate EPS is optional and, if shown, appears only in the separate statement of profit and loss.

Example 2

Beta Ltd is listed. It has 10,00,000 equity shares, 50,000 non-convertible preference shares, 20,000 convertible preference shares, and 1,00,000 share options granted to employees. It has also agreed to issue 30,000 equity shares to the vendor of a business for no cash if the acquired unit earns a set profit next year. Classify each instrument under Ind AS 33.

Show the solution

Equity shares of 10,00,000 are the most junior equity, so they are ordinary shares.
Non-convertible preference shares of 50,000 give no right to ordinary shares. They are not ordinary or potential ordinary shares. Their post-tax dividend is deducted from the numerator: if non-cumulative, only when declared; if cumulative, whether or not declared.
Convertible preference shares of 20,000 may entitle holders to ordinary shares, so they are potential ordinary shares.
Employee options of 1,00,000 are rights to buy ordinary shares, so they are potential ordinary shares (options and share-based payment arrangements).
The 30,000 shares promised to the vendor are issuable for no cash on satisfaction of a profit condition in an agreement. They are contingently issuable ordinary shares, a type of potential ordinary share.
Effect: only the 10,00,000 shares form the basic EPS denominator at this point. The potential ordinary shares are tested for dilution in diluted EPS.

Answer: Ordinary shares: 10,00,000 equity shares. Potential ordinary shares: convertible preference shares, employee options and the contingently issuable shares. Non-convertible preference shares are neither, but their dividends adjust the numerator as per the cumulative or non-cumulative rule.

Exam tips

In case MCQs, check first whether the entity is listed or filing to list. Many wrong options fail on scope alone.
Write answers in provision, facts and conclusion form. Quote the consolidated versus separate placement rule when both statements appear.
List all types of potential ordinary shares from memory: convertibles, options and warrants, share-based payments, contingently issuable shares.
Do not mix the old AS 20 wording into your answer. Refer only to Ind AS 33.
If a question moves into calculation, state the classification first, since marks are often given for it.

Practice questions from Ind AS 33 Earnings per Share

Ind AS 33 Objective, Scope and Definitions: frequently asked questions

Does Ind AS 33 apply to unlisted companies?

Not as a requirement. It applies to entities with publicly traded ordinary shares or potential ordinary shares, or those filing to issue them in a public market. An unlisted entity that chooses to show EPS must still follow the standard in full.

Which EPS is mandatory when a company has consolidated and separate statements?

EPS on the consolidated basis is required. Separate-basis EPS is optional and, if presented, can appear only in the separate statement of profit and loss.

What are potential ordinary shares under Ind AS 33?

They are financial instruments or contracts that may entitle the holder to ordinary shares. Examples are convertible debt, convertible preference shares, options, warrants, share-based payment arrangements and contingently issuable shares.

What are contingently issuable ordinary shares?

They are ordinary shares issuable for little or no cash or other consideration once specified conditions in a contingent share agreement are met. They are a type of potential ordinary share.