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CMA Intermediate · Corporate Accounting and Auditing · Earnings per Share (Ind AS 33)

Aarav Textiles Ltd issued 1 bonus share for every 4 shares held on 1 January 2027 (the financial year ends 31 March 2027). It had 8,00,000 equity shares outstanding before the issue. Under Ind AS 33, how many shares are used to compute basic EPS for the year, assuming no other share changes?

The weighted number of shares is 10,00,000. A bonus issue brings no additional resources, so the pre-issue shares of 8,00,000 are increased by the 2,00,000 bonus shares as if the issue happened at the start of the earliest period presented, with no time-weighting.

  1. A8,00,000 shares
  2. B10,00,000 sharesCorrect
  3. C9,50,000 shares
  4. D10,40,000 shares

Explanation

A bonus issue is made without any change in resources. The shares before the issue are adjusted as if the issue happened at the start of the earliest period presented. Bonus shares = 8,00,000 / 4 = 2,00,000, so the total is 10,00,000. Weighting the bonus shares for only 3 months (9,50,000) is wrong because there is no change in resources.

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