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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 for the year. During the year it charged ₹4,00,000 (an item of expense otherwise required to be recognised in profit or loss under accounting standards) directly to securities premium account. There were no preference dividends and the weighted average number of equity shares was 10,00,000. As per Ind AS 33 additions to IAS 33, what is basic EPS from continuing operations?

Basic EPS is ₹4.60. Ind AS 33 requires an expense debited to securities premium or other reserves to be deducted from profit from continuing operations. Earnings become ₹46,00,000 (50,00,000 less 4,00,000), divided by 10,00,000 weighted average shares.

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

Explanation

Ind AS 33 requires an expense that should be in profit or loss but is debited to securities premium or other reserves to be deducted from profit from continuing operations for basic EPS. So earnings = 50,00,000 − 4,00,000 = 46,00,000; divided by 10,00,000 shares = ₹4.60. ₹5.00 ignores the deduction, and ₹5.40 wrongly adds it.

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