Advanced Accounting · AS 20 Earnings Per Share

Presentation and Disclosure of EPS (AS 20)

Updated 4 October 2026 · Fact-checked

Under AS 20, show basic and diluted EPS on the face of the statement of profit and loss, for every period presented, with equal prominence, even if negative. In the notes, give the numerators, the weighted average share numbers, their reconciliation, and the nominal value per share. Disclose material post-balance-sheet share transactions.

Understand Presentation and Disclosure of EPS

Computing EPS is only half the job. AS 20 also tells you where to show it and what to say about it. Examiners test both, usually as a short theory question or as the last part of a numerical.

On the face of the statement of profit and loss: you must present basic EPS and diluted EPS for each class of equity shares that has a different right to share in the net profit. Both figures get equal prominence for all periods presented. This applies even when the figure is negative. A loss gives a loss per share, and you still show it.

In the notes: you must disclose the amounts used as numerators and reconcile them to the net profit or loss for the period. You must disclose the weighted average number of equity shares used as denominators, and reconcile the basic and diluted denominators to each other. You must also state the nominal value of the shares along with the EPS figures.

Other components of profit: the standard figure is based on net profit or loss attributable to equity shareholders, which is after extraordinary items and after preference dividends. AS 20 does not require separate EPS for extraordinary items or discontinued operations. If you choose to show per-share amounts for another reported component, such as profit before extraordinary items, you must use the same weighted average number of shares. You must show these amounts with equal prominence in the notes, and state whether the numerator is before or after tax. If the component is not a line item in the statement of profit and loss, you must reconcile it to a line item that is.

Restatement and later events: EPS for all periods presented is adjusted for bonus issues, share splits and similar events. It is also adjusted for prior period errors and changes in accounting policies, and you disclose that fact. If such share changes happen after the balance sheet date but before the financial statements are approved, the per-share figures are adjusted and the fact is disclosed. Material share transactions after the balance sheet date that you do not adjust for, such as an issue for cash or a buyback, are described in the notes.

Key rules to remember

Basic EPS: Basic EPS = (Net profit or loss for the period attributable to equity shareholders) ÷ (Weighted average number of equity shares outstanding); The numerator is after preference dividends and after extraordinary items. This is the figure you present on the face.
Diluted EPS: Diluted EPS = (Adjusted net profit attributable to equity shareholders) ÷ (Weighted average equity shares + dilutive potential equity shares); Include only potential equity shares that reduce EPS from continuing ordinary operations. Show it with equal prominence to basic EPS.
Numerator adjustment for convertible debentures: Add back interest × (1 − tax rate); Adjust the numerator for the post-tax interest saved if the debentures are assumed converted.
Face presentation rule: Basic and diluted EPS: each class of equity shares, every period presented, equal prominence, shown even if negative; Applies on the face of the statement of profit and loss.
Note disclosures: Numerators + reconciliation to net profit; weighted average shares for basic and diluted + reconciliation; nominal value per share; Disclose material post-balance-sheet share transactions separately.
Optional component EPS: Component per share = (Component attributable to equity shareholders) ÷ (Same weighted average number of shares); Disclose it in the notes with equal prominence. State whether it is before or after tax, and reconcile to a line item if the component is not reported on the face.

How to solve Presentation and Disclosure of EPS questions

Use this order for any question on EPS presentation or disclosure. It also works when the question is a numerical followed by 'show the disclosure'.

1Identify the net profit after tax, then deduct preference dividend (and any extraordinary items already included stay in) to get the earnings attributable to equity shareholders.
2Compute the weighted average number of equity shares, adjusting for bonus issue and share split for all periods presented.
3Compute basic EPS and write it down first.
4Test each potential equity share for dilution. Adjust the numerator (for example post-tax interest) and add the shares to the denominator. Include it only if it reduces EPS.
5Compute diluted EPS using only the dilutive items.
6Show the face presentation: basic and diluted EPS for each class of equity shares, with the nominal value per share and current and previous year figures.
7Write the note: numerators with a reconciliation to net profit, the two denominators with their reconciliation, and any component EPS the question asks for.
8Add any restatement or post-balance-sheet event disclosure that the facts of the question trigger.

Quickest way: Four-line answer for presentation questions

When to use it: Use it when a question asks 'how will EPS be presented and disclosed' and gives little data. Also use it for 2-mark or 4-mark theory parts, and for MCQs on what AS 20 requires.

For MCQs, remember that basic and diluted both go on the face, with equal prominence. Reject any option saying diluted EPS can go only in the notes, or that a loss is not shown.
Remember that AS 20 does not demand separate EPS for extraordinary items or discontinued operations. Treat such per-share amounts as optional components with note disclosure.
For written answers, use a fixed format: face presentation, then numerators and reconciliation, then denominators and reconciliation, then nominal value, then post-balance-sheet events.
Show the working for each number so that you earn step marks even if the final EPS is slightly off.

Common mistakes in Presentation and Disclosure of EPS

Leaving out diluted EPS on the face when there are no dilutive items, or treating diluted EPS as a note-only item.
Students think diluted EPS is needed only when potential equity shares exist, and that the notes are enough.
Fix: State that both basic and diluted EPS are shown on the face of the statement of profit and loss with equal prominence. If nothing is dilutive, diluted EPS equals basic EPS and is still presented.
Skipping the presentation of a negative EPS.
The word 'earnings' makes students think a loss means no EPS.
Fix: Present loss per share. AS 20 requires basic and diluted EPS to be shown even when they are negative.
Writing that separate EPS must be given for extraordinary items or discontinued operations.
Students mix the optional component EPS rule with a mandatory requirement.
Fix: Say the mandatory figure is based on net profit attributable to equity shareholders. EPS for other components is optional, uses the same weighted average shares, and is disclosed in the notes with equal prominence.
Forgetting the reconciliations and the nominal value of shares.
Students focus on the EPS computation and treat the notes as extra.
Fix: Keep a checklist: numerators reconciled to net profit, denominators for basic and diluted reconciled to each other, nominal value per share.
Not restating previous-period EPS for bonus issue or share split.
Students adjust only the current year.
Fix: Adjust EPS for all periods presented, as if the bonus or split had occurred at the start of the earliest period. Disclose the fact where required.
Using a different share count for component EPS.
Students recompute the number of shares for each per-share figure.
Fix: Use the same weighted average number of shares for every per-share amount. Only the numerator changes.

Worked examples

Example 1

A company has net profit after tax of ₹9,00,000 for the year. It paid preference dividend of ₹1,50,000. Weighted average equity shares are 2,50,000 of ₹10 each. It also has 10% convertible debentures of ₹5,00,000 convertible into 50,000 equity shares. Tax rate is 30%. Compute basic and diluted EPS and state how they are presented.

Show the solution

Earnings for equity shareholders = 9,00,000 − 1,50,000 = ₹7,50,000.
Basic EPS = 7,50,000 ÷ 2,50,000 = ₹3.00.
Interest on debentures = 10% × 5,00,000 = ₹50,000. Post-tax interest = 50,000 × (1 − 0.30) = ₹35,000.
Incremental EPS of the debentures = 35,000 ÷ 50,000 = ₹0.70. This is below ₹3.00, so the debentures are dilutive.
Diluted numerator = 7,50,000 + 35,000 = ₹7,85,000. Diluted shares = 2,50,000 + 50,000 = 3,00,000.
Diluted EPS = 7,85,000 ÷ 3,00,000 = ₹2.62 (rounded).
Presentation: show basic EPS ₹3.00 and diluted EPS ₹2.62 on the face of the statement of profit and loss, with equal prominence, for current and previous year, and the nominal value of ₹10 per share.
Notes: reconcile numerators (7,50,000 to 7,85,000, and 9,00,000 less 1,50,000 to 7,50,000) and denominators (2,50,000 to 3,00,000).

Answer: Basic EPS = ₹3.00; diluted EPS = ₹2.62 (rounded). Both are shown on the face with equal prominence, with the numerators, denominators, their reconciliations and the ₹10 nominal value disclosed in the notes.

Example 2

A company's net profit after tax is ₹8,00,000. This includes an extraordinary gain of ₹2,00,000 (net of tax). There is no preference share capital and no potential equity shares. Weighted average equity shares are 2,00,000. The company wishes to also show EPS before the extraordinary gain. How should it present EPS?

Show the solution

Net profit attributable to equity shareholders = ₹8,00,000. It is after the extraordinary item.
Basic EPS = 8,00,000 ÷ 2,00,000 = ₹4.00.
There are no dilutive items, so diluted EPS = ₹4.00.
Present basic EPS ₹4.00 and diluted EPS ₹4.00 on the face of the statement of profit and loss.
Component: profit before the extraordinary gain = 8,00,000 − 2,00,000 = ₹6,00,000. Per share = 6,00,000 ÷ 2,00,000 = ₹3.00 using the same weighted average number of shares.
Disclose the ₹3.00 figure (basic and diluted) in the notes with equal prominence. State that the numerator is after tax, and that the extraordinary gain is net of tax.
Because this component is not shown as a line item on the face, reconcile it to a reported line item.

Answer: Basic and diluted EPS on the face: ₹4.00 each. Optional note disclosure: EPS before extraordinary gain ₹3.00, based on the same 2,00,000 weighted average shares, with the numerator basis stated and reconciled.

Exam tips

In theory questions, write the answer in order: face presentation, numerators, denominators, reconciliations, nominal value, post-balance-sheet events. This earns the marks for each point.
If the question mentions extraordinary items or discontinued operations, say that separate EPS is not mandatory. State the conditions for showing it voluntarily.
Always show the working for numerators and shares, even in a presentation question. Examiners give step marks for the computation.
For MCQs, watch for traps such as 'diluted EPS need not be shown if it equals basic EPS' or 'loss per share is not shown'. Both are wrong.
Show the previous year's EPS next to the current year figure. If a bonus issue occurred, state that the previous year figure has been restated.

Practice questions from AS 20 Earnings Per Share

Presentation and Disclosure of EPS in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Presentation and Disclosure of EPS: frequently asked questions

Where must EPS be shown under AS 20?

Basic and diluted EPS must be shown on the face of the statement of profit and loss for each class of equity shares with different rights to profit. They must be shown with equal prominence for all periods presented.

Is separate EPS required for extraordinary items or discontinued operations?

No. AS 20 requires EPS based on net profit attributable to equity shareholders. You may disclose per-share amounts for another component, using the same weighted average shares. Show them with equal prominence in the notes, state whether they are before or after tax, and reconcile to a line item if needed.

What must be disclosed in the notes besides EPS?

You must give the numerators with a reconciliation to net profit or loss, and the weighted average shares for basic and diluted EPS with a reconciliation between them. You must also give the nominal value of the shares, and describe material share transactions after the balance sheet date.

Should EPS be shown when the company has a loss?

Yes. You present a loss per share for basic and diluted EPS. AS 20 requires the figures even when they are negative.