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

Kaveri Industries Ltd has profit from continuing operations of Rs 12,00,000 and a loss on a one-time item. The company charged a Rs 2,00,000 expense directly to securities premium account, although accounting standards require it to be recognised in profit or loss. Under the additional paragraph Ind AS 33 adds after paragraph 12, how is this treated in computing basic EPS?

The Rs 2,00,000 expense is deducted from profit or loss from continuing operations when calculating basic EPS. Ind AS 33 requires items that should be in profit or loss but were charged to securities premium or other reserves to be deducted, so the numerator becomes Rs 10,00,000.

  1. AIgnored, because it was not debited to profit or loss
  2. BDeducted from profit or loss from continuing operations for basic EPSCorrect
  3. CAdded back to profit from continuing operations for basic EPS
  4. DDeducted only from diluted EPS numerator

Explanation

Where an item that should be recognised in profit or loss is debited or credited to securities premium or other reserves, the amount is deducted from profit or loss from continuing operations for basic EPS. The Rs 2,00,000 expense therefore reduces the numerator to Rs 10,00,000. Option A ignores the added Ind AS paragraph.

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