IAS 33 – Earning Per Share
Objective: The principles for determining and presenting earning per share (EPS). Earnings per Share apply to publicly traded entities, or entities in the process of issuing such shares. An entity that Present basic and diluted EPS in the income statement will include:
1. EPS for each class of ordinary shares.
2. EPS with equal prominence.
3. EPS for all period presented.
In consolidated financial statement EPS reflects earning attributable to the holder entity shareholders. Dilution is a reduction in EPS or an increase in loss per share on the assumption that convertible instruments are converted.
Basic EPS Calculation
1. Earnings numerator should be after deduction of all expenses including tax, and minority interests, and after deduction of dividends.
2. Denominator, weighted average number of shares during the period.
Profit - Dividends (1-tax)* – Minority interest Average number of shares
In Israel there is no tax on dividend *
Diluted EPS Calculation
1. Earnings numerator, the net profit for the period increased by: after tax amount of dividends, and adjusted for any other change in income or expenses that would result from the conversion of diluted potential and adjusted interest recognized in the period such as options, convertible securities, contingent, insurance agreements.
2. Denominator, All share included share that diluted basic (EPS)
Profit + Dividends (1-tax)* + Interest on Convertible Securities Number of shares that would be issued on conversion if all diluted (options + Convertible Securities diluted)
In Israel there is no tax on dividend *
The Differences and Similarities between US GAAP Law and IFRS
Similarities: both US GAAP and IFRS are
Significant Differences:
IFRS | US Law GAAP | |
Basic and diluted earnings per share (EPS) for both continuing operation and net income are presented on the face of the income statement. | Like IFRS basic and diluted earnings per share (EPS) for both continuing operation and net income are presented on the face of the income statement. | EPS presentation include: 1. Continuing Operation 2. Net Income. |
Basic and diluted EPS is disclosed for discontinued operations | Like IFRS basic and diluted EPS is disclosed for discontinued operations | EPS for Discontinued Operation |
Basic EPS is profit or loss attributable to ordinary shareholders of parent entity for the period, divided by weighted average number of ordinary shares. | Like IFRS basic EPS is profit or loss attributable to ordinary shareholders of parent entity for the period, divided by weighted average number of ordinary shares. | Basic EPS |
Diluted EPS is calculated based on profit or loss attributable to ordinary shareholders and the weighted average number of share outstanding, adjusted for the effects of all dilutive potential ordinary shares. | Like IFRS diluted EPS is calculated based on profit or loss attributable to ordinary shareholders and the weighted average number of share outstanding, adjusted for the effects of all dilutive potential ordinary shares. | Diluted EPS |
When a contract may be settled in either cash or shares at the entity's option, it treated as a potential ordinary shares | Like IFRS when a contract may be settled in either cash or shares at the entity's option, it treated as a potential ordinary share. Unlike IFRS the entity has the possibility if the contract will be paid fully or partially in cash | A contract to receive 1. Cash or 2. Shares Financial Instrument in the entity hand is basic EPS |
When a contract may be settled in either cash or shares at the holder's option it is use to calculate diluted EPS | Like IFRS when a contract may be settled in either cash or shares at the holder's option it is use to calculate diluted EPS | A contract to receive 1. Cash or 2. Shares Financial Instrument at the holder is diluted EPS |
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