Home › CA Final › financialreporting › Ind AS 33 — Earnings Per Share: Basic EPS, Preference Share Adjustments, Increasing-Rate Preference Shares, Redemption/Early Conversion › ABC Ltd. issues 9% preference shares of ₹10 each…
ABC Ltd. issues 9% preference shares of ₹10 each, total issue value ₹10 lakh; 5-year tenor at redemption value ₹11. After 3 years (31 Mar 20X4), early redemption at ₹12 each. Identify the EPS impact for 20X3-20X4.
A₹10,00,000 added back
BNo EPS adjustment
C₹2,00,000 deducted
D₹1,00,000 deducted from earnings (the additional ₹1 per share over original redemption value, compensating for foregone future dividends)
Answer & Solution
Correct answer: D. ₹1,00,000 deducted from earnings (the additional ₹1 per share over original redemption value, compensating for foregone future dividends)
Per Ind AS 33 illustration: the additional ₹1 per share (₹12 vs ₹11 original) × 1,00,000 shares = ₹1,00,000 is the premium for early conversion. This is deducted from EPS numerator for the year of early redemption.
Related questions
Identify the correct statement about EPS computation under Ind AS 33.An entity issued preference shares at a premium of ₹1,00,000 to compensate buyers for an AInd AS 33 lists examples of POTENTIAL ORDINARY SHARES. Which is NOT one?An entity's preference shares are classified as a financial LIABILITY. The interim period An item of income/expense is required to be in P&L per Ind AS but the entity instead crediAn entity has NON-cumulative preference shares (equity-classified) for which it CHOSE NOT Adjustments to EPS numerator for year 20X4: PAT ₹1,50,000; amortisation of discount on incAn entity repurchases EQUITY-classified preference shares at a DISCOUNT to carrying amount