CA Final · Financial Reporting · Ind AS 33 Earnings per Share
Kaveri Industries Ltd issued preference shares at a discount. The discount on issue is amortised over the period and, under Indian law, the company debits part of it to the securities premium account. For computing basic EPS under Ind AS 33, how is the discount or premium on the preference shares treated?
The discount or premium is amortised to retained earnings regardless of whether law lets it be debited or credited to securities premium account, and it is treated as a preference dividend adjustment when computing profit attributable to ordinary equity holders. Debiting securities premium therefore does not exclude it from EPS.
- AIgnored for EPS if debited to securities premium account
- BAmortised to retained earnings, irrespective of whether it is debited or credited to securities premium account under law, and treated as preference dividend adjustmentCorrect
- CDeducted only from other comprehensive income
- DAdded back to profit because it is a non-cash item
Explanation
Paragraph 15 of Ind AS 33 was amended to state that the discount or premium on preference shares is amortised to retained earnings irrespective of any debit or credit to securities premium account under law. It therefore is treated as a preference dividend in arriving at earnings for ordinary equity holders. The securities premium route does not exclude it.
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