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CA Final · Financial Reporting · Ind AS 33 Earnings per Share

Aarav Pharma Ltd reports profit from continuing operations of ₹50,00,000 before the following. During the year it incurred share issue expenses of ₹4,00,000 which, as permitted by law, were debited directly to securities premium account, though such an expense would otherwise be recognised in profit or loss under the accounting standards. There are no preference shares. The weighted average number of equity shares is 10,00,000. What is the basic EPS from continuing operations under Ind AS 33?

Basic EPS from continuing operations is ₹4.60. Ind AS 33 requires an expense that should have gone through profit or loss, but was debited to securities premium, to be deducted from continuing-operations profit, giving ₹46,00,000 divided by 10,00,000 shares.

  1. A₹5.00
  2. B₹4.60Correct
  3. C₹5.40
  4. D₹4.00

Explanation

Ind AS 33 inserts a paragraph after paragraph 12 requiring items otherwise recognised in profit or loss but debited to securities premium or other reserves to be deducted from profit from continuing operations for basic EPS. Adjusted profit = 50,00,000 - 4,00,000 = 46,00,000. EPS = 46,00,000 / 10,00,000 = ₹4.60. ₹5.00 ignores the deduction, and ₹5.40 adds it instead.

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