Ind AS 33, Earnings per Share, Difference Between AS 20 and Ind AS 33

Ind AS 33, Earnings per Share : The objective of Ind AS 33 is to prescribe principles for the determination and presentation of earnings per share, so as to improve performance comparisons between different entities in the same reporting period and between different reporting periods for the same entity. The focus of this Standard is on the denominator of the earnings per share calculation. Ind AS 33 shall be applied to companies that have issued ordinary shares to which Indian Accounting Standards (Ind  AS)  notified under the Companies  Act applies.

An ordinary share is an equity instrument that is subordinate to all other classes of equity instruments. A potential ordinary share is a financial instrument or other contract that may entitle its holder to ordinary shares.

An entity shall present in the statement of profit and loss basic and diluted earnings per share for profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity and for profit  or  loss attributable to the ordinary equity holders of the  parent  entity  for the period for each class of ordinary shares that has a  different right to  share in  profit  for the period. An entity shall present basic and diluted earnings per share  with equal prominence for all periods presented.

An entity that reports a discontinued operation shall disclose the basic and diluted amounts per share for the discontinued operation either in the statement of profit and loss or in the notes.

Basic earnings per share shall be calculated by dividing profit or loss attributable to ordinary equity holders of the parent entity (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the period.

For the purpose of calculating basic earnings per share, the amounts attributable to ordinary equity holders of the parent entity in respect of:

• profit or loss from continuing operations attributable to the parent  entity; and
• profit or loss attributable to the parent entity

shall be the amounts in (a) and (b) adjusted for the after-tax amounts of preference dividends, differences arising on the settlement of preference shares, and other similar effects of preference shares classified as equity.

Where any item of income or expense which is otherwise required to be recognised in profit or loss in  accordance with Indian Accounting Standards    is debited or credited to securities premium account/other reserves , the amount in respect thereof shall be deducted from profit or  loss  from  continuing operations for the purpose of calculating basic earnings per share.

For the purpose of calculating basic earnings per share, the number  of ordinary shares shall be the weighted average number of ordinary shares outstanding during the period. (Paragraph 19 of the Standard)

The weighted average number of ordinary shares outstanding during the  period and for all periods presented shall be adjusted for events, other than the conversion of potential ordinary shares that have changed the number of ordinary shares outstanding without a corresponding change in resources . (Paragraph 26 of the Standard)

Diluted earnings per share shall be calculated by an entity by adjusting profit  or loss attributable to ordinary equity holders of the parent entity, and the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares.

Dilution is a reduction in earnings per share or an increase in loss per share resulting from the assumption that convertible  instruments  are  converted, that options or warrants are exercised, or that  ordinary shares are issued  upon the satisfaction of specified conditions.

For the purpose of calculating diluted earnings per share, the number of ordinary shares shall be the weighted average number of ordinary shares calculated in accordance with paragraphs 19 and 26, plus the weighted average number of ordinary shares that would be issued on the conver sion of all the dilutive potential ordinary shares into ordinary shares.

Potential ordinary shares shall be treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations.

An entity uses profit or loss from continuing operations attributable to the parent entity as the control number to establish whether potential ordinary shares are dilutive or anti-dilutive. In determining whether potential ordinary shares are dilutive or anti-dilutive, each issue or series of potential ordinary shares is considered separately rather than in aggregate.

Retrospective adjustments

If the number of ordinary or  potential ordinary shares outstanding increases  as a result of a capitalisation, bonus issue or share split, or decreases as a result of a reverse share split, the calculation of basic and diluted earnings   per share for all periods presented shall be adjusted retrospectively. If these changes occur after the reporting period but before the financial statements are approved for issue, the per share calculations for those and any prior period financial statements presented shall be based on the new number of shares.

Difference Between AS 20 and Ind AS 33

AS 20	IND AS 33
Requires the disclosure of EPS with and without extraordinary items.	As per IND AS 1 on “Presentation of Financial Statements” no item of income or expense can be recognised as extraordinary item. Thus, as per IND AS 33. EPS has to be disclosed without extraordinary items only.
Does not require disclosure of basic and diluted EPS from continuing and discontinued operations separately.	Requires the disclosure of basic and diluted EPS from continuing and discontinued operations separately.
Does not specifically deals with the same.	Provides additional clarity and guidance on aspects like options held by entity on its own shares like: written put options, purchased options, etc.

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