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

Under Ind AS 33, the objective of diluted earnings per share is described as:

Diluted EPS has an objective consistent with basic EPS: measuring each ordinary share's interest in the entity's performance, but also giving effect to all dilutive potential ordinary shares outstanding during the period.

  1. Ato show the profit that would arise if all shares were sold at fair value
  2. Bto provide a measure of the interest of each ordinary share in performance while giving effect to all dilutive potential ordinary shares outstanding during the periodCorrect
  3. Cto measure only the effect of shares issued after the reporting date
  4. Dto replace basic EPS where preference dividends are paid

Explanation

The standard says diluted EPS has an objective consistent with basic EPS, giving a measure of each ordinary share's interest in performance, while giving effect to all dilutive potential ordinary shares outstanding during the period. It supplements, not replaces, basic EPS.

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