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CA Intermediate · Advanced Accounting · AS 20 Earnings Per Share

Kaveri Agro Ltd had 3,00,000 equity shares throughout FY 2025-26 and a net profit of ₹9,00,000. In May 2026, before the financial statements were approved by the Board, it issued bonus shares in the ratio 1:2 (one share for every two held). What basic EPS should be presented for FY 2025-26?

Basic EPS is ₹2.00. Bonus shares issued after the balance sheet date but before approval of the financial statements are treated as outstanding for the whole period, so shares become 4,50,000 and ₹9,00,000 divided by that gives ₹2.00.

  1. A₹3.00
  2. B₹2.40
  3. C₹1.50
  4. D₹2.00Correct

Explanation

A bonus issue after the year-end but before approval of the financial statements requires the per-share calculation to be based on the new number of shares for all periods presented. Shares = 3,00,000 + 1,50,000 = 4,50,000. EPS = 9,00,000 / 4,50,000 = ₹2.00. ₹3.00 ignores the bonus issue.

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