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

Kaveri Pharma Ltd had profit from continuing operations of ₹50,00,000 before considering one item. During the year it charged an expense of ₹4,00,000, which accounting standards require to be recognised in profit or loss, directly to the securities premium account. Preference dividend and other adjustments are nil, and weighted average equity shares are 10,00,000. What is the basic EPS from continuing operations under Ind AS 33?

Basic EPS from continuing operations is ₹4.60. Ind AS 33 requires an expense that should hit profit or loss but is debited to securities premium to be deducted, so profit becomes ₹46,00,000, which divided by 10,00,000 weighted shares gives ₹4.60.

  1. A₹5.00
  2. B₹4.60Correct
  3. C₹5.40
  4. D₹4.00

Explanation

Ind AS 33 requires that an item of expense otherwise required to be recognised in profit or loss but debited to securities premium or other reserves be deducted from profit from continuing operations for basic EPS. Adjusted profit = 50,00,000 - 4,00,000 = 46,00,000. Dividing by 10,00,000 shares gives ₹4.60. Ignoring the adjustment gives ₹5.00, which is wrong.

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