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

Ind AS 33 requires profit attributable to ordinary equity holders of the parent to be adjusted for diluted EPS. Which adjustment is correct? Profit is ₹10,00,000, the company has convertible debentures whose after-tax interest recognised is ₹60,000, and there are no other income or expense changes on conversion.

The numerator becomes ₹10,60,000. Ind AS 33 increases profit by the after-tax interest recognised on dilutive potential ordinary shares, since conversion would eliminate that interest; ₹10,00,000 plus ₹60,000 gives ₹10,60,000.

  1. A₹9,40,000, as the after-tax interest is deducted
  2. B₹10,60,000, as the after-tax interest is added backCorrect
  3. C₹10,00,000, as no adjustment is made to profit
  4. D₹10,30,000, as half the interest is added back

Explanation

For diluted EPS, profit is increased by the after-tax amount of dividends and interest recognised on the dilutive potential ordinary shares, as conversion would remove that cost. So 10,00,000 + 60,000 = 10,60,000. Deducting it (9,40,000) is the wrong sign.

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