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

Meghna Pharma Ltd issued preference shares at a discount, and the discount is amortised over the term. The company's law requires the discount to be debited to securities premium account. For basic EPS under Ind AS 33, how should the amortisation of this discount be treated?

The discount is amortised to retained earnings regardless of the securities premium account debit required by law, and it is taken into account when arriving at profit attributable to equity holders. Ind AS 33 paragraph 15 was amended specifically to clarify this, so ignoring it because of the legal debit is wrong.

  1. AAmortised to retained earnings, irrespective of the securities premium account debit, and adjusted in arriving at earnings attributable to equity holdersCorrect
  2. BIgnored in EPS because it was debited to securities premium
  3. CCharged to diluted EPS only
  4. DRecognised as other comprehensive income and excluded from EPS

Explanation

Paragraph 15 of Ind AS 33 was amended to add that the discount or premium on preference shares is amortised to retained earnings irrespective of whether it is debited or credited to securities premium account under law. It therefore enters the adjustment to profit attributable to ordinary equity holders. Option B is the treatment the amendment specifically overrides.

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