Earnings Per Share

Date recorded:

The Board discussed several issues relating to IAS 33, Earnings Per Share:

Contracts that may be settled in cash or shares

SIC 24 takes a different approach compared to GAAP in the Canada, United Kingdom, and United States. SIC 24 requires the calculation of diluted EPS to assume that shares will be issued under the contract whereas the latter three do not require the calculation of diluted EPS to include the shares if available facts such as past experience or stated policy suggest that the contract will be settled in cash.

The Board considered the two approaches and expressed a preference for the approach in Canada, UK, and US.

Premiums on repurchase of preference shares

The Board agreed that where an entity purchases (for cancellation) its own preference shares for more than the carrying value of those shares, the excess over carrying value should be dealt with in calculating basic EPS as though it were a dividend on those preference shares.

Format of the Standard

IAS 33 is to be revised for the above points and for other minor issues. Most paragraphs in the standard will be affected. Accordingly it was discussed whether the Board wished the Standard to be redrafted in the style of a new IFRS. It was agreed that much of the detail would be pulled out of the Standard and put in appendices and that the standard would be drafted as an IFRS.

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