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

Rohini Ltd. reports profit from continuing operations of ₹50,00,000 before an adjustment. During the year it charged an expense of ₹4,00,000, which is otherwise required to be recognised in profit or loss, directly to securities premium account as permitted by law. Preference dividend is nil and weighted average equity shares are 10,00,000. What is basic EPS from continuing operations under Ind AS 33?

Basic EPS from continuing operations is ₹4.60. The ₹4,00,000 expense charged to securities premium must be deducted from the ₹50,00,000 profit, giving ₹46,00,000, which is divided by 10,00,000 weighted average shares. Ignoring the deduction would wrongly give ₹5.00.

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

Explanation

The Ind AS 33 addition requires that an item of expense that should go to profit or loss but is debited to securities premium or other reserves be deducted from profit from continuing operations for basic EPS. So 50,00,000 - 4,00,000 = 46,00,000. Dividing by 10,00,000 shares gives ₹4.60. ₹5.00 ignores the deduction; ₹5.40 adds instead of deducting.

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