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ACCA Strategic Professional · Strategic Business Reporting (International) · Analysis and interpretation of financial and non-financial information and measurement of performance

Which statement about the calculation of EPS under IAS 33 is correct?

Basic and diluted EPS must be restated for bonus issues, splits or consolidations occurring after the reporting date but before the financial statements are authorised, because they change share numbers without changing resources. Full-price issues are time-weighted, and dilution means reducing EPS from continuing operations.

  1. ABasic EPS is restated for a bonus issue occurring after the reporting date but before the financial statements are authorised for issueCorrect
  2. BPotential ordinary shares are treated as dilutive only if converting them increases EPS from continuing operations
  3. CDiluted EPS is calculated using profit before preference dividends
  4. DA share issue at full market price is treated as if it occurred at the start of the period

Explanation

IAS 33 requires per-share calculations to reflect bonus issues, share splits and consolidations occurring after the period end but before authorisation, as no resources change. Potential shares are dilutive only if they reduce EPS from continuing operations, not increase it. Full-price issues are weighted from the issue date.

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