IASB proposes to amend IAS 33 Earnings per Share

  • IASB Exposure Draft (original) Image

07 Aug 2008

The IASB has proposed to amend IAS 33 Earnings per Share (EPS) to simplify the calculation of EPS and to converge the international standard and US GAAP.

The proposal is set out in an exposure draft (ED) titled Simplifying Earnings per Share. Comments are requested by 5 December 2008. Concurrently, the US Financial Accounting Standards Board has proposed to amend its EPS standard, SFAS 128 Earnings per Share. The IASB's proposal, if adopted, would supersede the version of IAS 33 issued in 2003 and amended in 2007 by IAS 1.

Among other things, the revisions to IAS 33 would:

  • Provide a clear principle to determine which shares and other instruments should be included in the EPS calculation. Under that principle, the weighted average number of ordinary shares includes only those instruments that give their holder the right to share currently in profit or loss of the period.
  • Clarify the EPS calculation for particular instruments, such as contracts to sell or repurchase an entity's own shares and participating instruments. The ED treats those contracts as if the entity had already repurchased the shares. Therefore, the entity would exclude those shares from the denominator of the EPS calculation.
  • Amend the calculation of diluted EPS for participating instruments and two-class ordinary shares. If a convertible financial instrument would have a more dilutive effect if conversion is assumed, then the entity would assume the more dilutive treatment for diluted EPS.
  • Simplify the EPS calculation for instruments that are accounted for at fair value through profit or loss. For such instruments (including the derivative component of a compound financial instrument), an entity would not adjust the numerator or denominator of the diluted EPS calculation.
Click for IASB Press Release (PDF 48k).


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