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

Meridian Steels Ltd has 8,00,000 equity shares throughout the year and profit from continuing operations of ₹64,00,000 after the items below. Expenses of ₹6,00,000, which should be recognised in profit or loss, were debited to other reserves. Preference dividend of ₹2,00,000 is payable on non-cumulative preference shares and was declared for the year. The amortisation of a preference share discount of ₹1,00,000 for the year was charged to retained earnings and is not included in the ₹64,00,000. A loss from discontinued operations of ₹4,00,000 is separately recognised and is included in neither figure. What is basic EPS from continuing operations?

Basic EPS from continuing operations is ₹6.875. Start with ₹64,00,000, deduct ₹6,00,000 of expense charged to reserves, then ₹2,00,000 preference dividend and ₹1,00,000 discount amortisation, leaving ₹55,00,000, and divide by 8,00,000 weighted shares.

  1. A₹6.875Correct
  2. B₹7.50
  3. C₹6.625
  4. D₹6.75

Explanation

Continuing profit 64,00,000 less other-reserve-debited expense 6,00,000 = 58,00,000. Less preference dividend 2,00,000 and discount amortisation 1,00,000 = 55,00,000. EPS = 55,00,000 / 8,00,000 = ₹6.875. ₹7.50 omits the reserve-debited expense and the preference items. ₹6.625 subtracts the discontinued loss too, which does not belong in continuing EPS, via 51,00,000/8,00,000 = 6.375 style errors. ₹6.75 omits the discount amortisation.

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