PAS 33- EPS

Question 1

If both parent and consolidated statements are presented in a single report, EPS is required only for the _________________. [IAS 33.4]

Answer 1

consolidated statements

Question 2

An equity instrument that is subordinate to all other classes of equity instruments.

Answer 2

Ordinary share

Question 3

financial instrument or other contract that may entitle its holder to ordinary shares.

Answer 3

Potential ordinary share

Question 4

Examples of potential OS

Answer 4

convertible debt 
convertible preferred shares
share warrants 
share options 
share rights 
employee stock purchase plans 
contractual rights to purchase shares 
contingent issuance contracts or agreements (such as those arising in business combination)

Question 5

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.

Answer 5

Dilution

Question 6

an increase in earnings per share or a reduction 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.

Answer 6

Antidilution

Question 7

An entity whose securities are publicly traded (or that is in process of public issuance) must present, on the face of the statement of comprehensive income, basic and diluted EPS for: [IAS 33.66]

Answer 7

profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity;

and 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.

Question 8

If an entity presents the components of profit or loss in a separate income statement, it presents EPS only in that separate statement. [IAS 33.4A]

Answer 8

True

Question 9

Basic and diluted EPS must be presented with equal prominence for all periods presented. [IAS 33.66]

Answer 9

True

Question 10

Basic and diluted EPS must be presented even if the amounts are negative (that is, a loss per share). [IAS 33.69]

Answer 10

True

Question 11

If an entity reports a discontinued operation, basic and diluted amounts per share must be disclosed for the discontinued operation either on the face of the of comprehensive income (or separate income statement if presented) or in the notes to the financial statements. [IAS 33.68 and 68A]

Answer 11

True

Question 12

The earnings numerators (profit or loss from continuing operations and net profit or loss) used for the calculation should be after deducting all expenses including taxes, minority interests, and preference dividends. [IAS 33.12]

Answer 12

True

Question 13

Contingently issuable shares are included in the basic EPS denominator when the contingency has been met. [IAS 33.24]

Answer 13

True

Question 14

Convertible securities. The numerator should be adjusted for the after-tax effects of dividends and interest charged in relation to dilutive potential ordinary shares and for any other changes in income that would result from the conversion of the potential ordinary shares. [IAS 33.33] The denominator should include shares that would be issued on the conversion. [IAS 33.36]

Answer 14

True

Question 15

Options and warrants. In calculating diluted EPS, assume the exercise of outstanding dilutive options and warrants. The assumed proceeds from exercise should be regarded as having been used to repurchase ordinary shares at the average market price during the period. The difference between the number of ordinary shares assumed issued on exercise and the number of ordinary shares assumed repurchased shall be treated as an issue of ordinary shares for no consideration. [IAS 33.45]

Answer 15

True

Question 16

Contingently issuable shares. Contingently issuable ordinary shares are treated as outstanding and included in the calculation of both basic and diluted EPS if the conditions have been met. If the conditions have not been met, the number of contingently issuable shares included in the diluted EPS calculation is based on the number of shares that would be issuable if the end of the period were the end of the contingency period. Restatement is not permitted if the conditions are not met when the contingency period expires. [IAS 33.52]

Answer 16

True

Question 17

Contracts that may be settled in ordinary shares or cash. Presume that the contract will be settled in ordinary shares, and include the resulting potential ordinary shares in diluted EPS if the effect is dilutive. [IAS 33.58]

Answer 17

True

Question 18

Calculation of basic and diluted EPS for all periods presented is adjusted ____________ when 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.

Answer 18

Retrospectively

Question 19

If changes occur after the balance sheet date but before the financial statements are authorised for issue, the EPS calculations for those and any prior period financial statements presented are based on the new number of shares. Disclosure is required. [IAS 33.64]

Answer 19

True

Question 20

Basic and diluted EPS are also adjusted for the effects of errors and adjustments resulting from changes in accounting policies, accounted for retrospectively. [IAS 33.64]

Answer 20

True

Question 21

Diluted EPS for prior periods should not be adjusted for changes in the assumptions used or for the conversion of potential ordinary shares into ordinary shares outstanding. [IAS 33.65]

Answer 21

True

Question 22

If EPS is presented, the following disclosures are required: [IAS 33.70]

Answer 22

the amounts used as the numerators in calculating basic and diluted EPS, and a reconciliation of those amounts to profit or loss attributable to the parent entity for the period

the weighted average number of ordinary shares used as the denominator in calculating basic and diluted EPS, and a reconciliation of these denominators to each other

instruments (including contingently issuable shares) that could potentially dilute basic EPS in the future, but were not included in the calculation of diluted EPS because they are antidilutive for the period(s) presented

a description of those ordinary share transactions or potential ordinary share transactions that occur after the balance sheet date and that would have changed significantly the number of ordinary shares or potential ordinary shares outstanding at the end of the period if those transactions had occurred before the end of the reporting period. Examples include issues and redemptions of ordinary shares issued for cash, warrants and options, conversions, and exercises [IAS 34.71]

Question 23

IAS 33 applies to entities whose securities are publicly traded or that are in the process of issuing securities to the public. [IAS 33.2] Other entities that choose to present EPS information must also comply with IAS 33. [IAS 33.3]

Answer 23

True