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CMA Intermediate · Corporate Accounting and Auditing · Earnings per Share (Ind AS 33)

Under Ind AS 33, basic earnings per share is calculated by dividing the profit or loss attributable to ordinary equity holders of the parent entity by which denominator?

The denominator is the weighted average number of ordinary shares outstanding during the period. Ind AS 33 requires the time-weighted figure so that the timing of share issues is reflected. Closing or opening share counts, or counts including potential shares, do not give basic EPS.

  1. ANumber of ordinary shares outstanding at the end of the period
  2. BWeighted average number of ordinary shares outstanding during the periodCorrect
  3. CNumber of ordinary shares outstanding at the beginning of the period
  4. DWeighted average number of ordinary and potential ordinary shares outstanding

Explanation

Ind AS 33 (paragraph 10) defines basic EPS as profit or loss attributable to ordinary equity holders of the parent divided by the weighted average number of ordinary shares outstanding during the period. Using the closing number ignores the timing of share issues. Including potential ordinary shares belongs to diluted EPS.

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