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

Meghna Ltd's profit from continuing operations is Rs 50,00,000. During the year, a Rs 4,00,000 expense that accounting standards require to be recognised in profit or loss was instead debited directly to securities premium account. Weighted average equity shares are 10,00,000 and there are no preference dividends. Under Ind AS 33, basic EPS is:

Basic EPS is Rs 4.60. The Rs 4,00,000 expense debited to securities premium must be deducted from continuing-operations profit, giving Rs 46,00,000, which divided by 10,00,000 weighted shares yields Rs 4.60. Ignoring the deduction gives Rs 5.00, and adding it wrongly gives Rs 5.40.

  1. ARs 5.00
  2. BRs 4.60Correct
  3. CRs 5.40
  4. DRs 4.00

Explanation

Ind AS 33 requires an item of income or expense, otherwise recognised in profit or loss, that is debited to securities premium or reserves to be deducted from profit from continuing operations for basic EPS. Earnings = 50,00,000 - 4,00,000 = 46,00,000. Dividing by 10,00,000 shares gives Rs 4.60. Rs 5.00 ignores the adjustment; Rs 5.40 adds it instead of deducting.

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