with Nominal Value

Equity shares different

Net
Profit = 2000000
-

Equity shares :-

10000
↓
Equity shares ofI 10 fully paid up
. each

10000 Equity shares of Iso

each
fully paid up
.

Calculate Basic EPS

.

Equivalent number of
Equity shareo

00000000
solution :· NP =

of FV 10 each
!
Assume all , equity shares are =

EPS =
100/sh ·

= 10000 + 50000
&
,
=
60000 E S
. .
(FV 10) =

EPS = 2 000 000 ,

2

10000 X (2 + 50000 X12

12 12

= 33 .

33/share (FV 10) =

= 33 33x5
. (FV 50) =

= 166 65 .

Assume ,
all
equity shares are of #V = 50

=
2000 + 10000
=
12000 Equity shares

(FV -
20000000
EPS =
= 166 65 . =

= 33 33
.
(FV = 10)

More than I class of Equity shares

'A &
Equity shares : 50000 Ordinary Equity Shares

'B'
50000
-
ord
navy Equity shares

Dividend of B' Shares is 1 times the dividend

rights Equity 5
.

rights
of A
equity shares
-

Net Profit = 5000 000.

Calculate EPS .
solution : -

ordinary shares 'B'ordinary shares

1 5
Dividend
Rights
.

1 . I

3000000
Profit apportioned 2000000
=
. Net
2 = -

5)
-

St2
( 5000000 x1
·

X1/2 5)
.

=
=
=
5000000 .
-

50000
Equity 50000 =
. Number of
3 Shares =
-
-

I
68
40
4 .
EPS
=
 Period
Per Net
Profit Equity share
attributible to holders =>

!
Earning
Share =

Number of
Equity Shares Period

1.
Basic EPS =>
-
Point of time

Net
Profit before tax Weighted Average Number of
Equity shares

-
Tax expense/provision
Number of
Es weights assign
-

Net Profit after tax

Dividend
Preference of
equity
-

Number shares over a

attributible
Net
Profit to ESH
period of time.

Period of time

Weighted Average Number of

Equity shares

Example 1 :
Equity shares as on 1 4 20 = 0 000 shares
100
- : .

issued 110.90 50000 shares

Shares on =

1 1 21 30000 shares
boughtback
shares on - . =

for the 20-21.

number of
Equity shares year
calculate
weighted average
Solution : -

Method 1 : -

X 30000
-

50000
Weighted Average 100 000
x1
= +
,

( I
Number of shares
method =
100
, 000 + 25000
-
7500
- !

ES
1 7500
1
.
=

Method 2 :-

Weighted Average & 120 000

x
+
=
100000 X 2 + 150000 X, ,

12
/Balances method)
= 50000 + , 500
37 + 30000
= 117500E S .

-
 Amalgamation
I - Y

Purchase
Merger
↓ di

and Reserves
profits reserves
Oney Statutory
are
All

of Vendor to are takeover

takenover .

EPS =
NPAESH
(Purchasing to + Vendor C .

)
b ↓

Before After Before

amalg. amalg .

amalg

Shares (Purchasing
Equity Co
. + shares issued to
de Vendor 10.

weight assigned "assigned

weights
from
las discussed
beginning
above&
from
beginning
of

period
Y

EPS =
NPAESH
(Purchasing to + Vendor C .

)
b ↓

Before After Before

amalg. amalg .

amalg

Shares (Purchasing
Equity 10
. + shares issued to
de Vendor 10.

weight assigned
↓s

weights assigned
from
las discussed
beginning
above&
from
beginning
of

period
↓
Date of
Amalgamation
in of in the nature of purchase
Amalgamation the nature
merger Amalgamation
:-

EPS =
, 000 + 800000 + 400000
500 EPS = , 000
500000 + 800
1 - - -

10000 + 5000 X1 10000 X12 + 5000 Xa

X Th
A

12 12
=
104
= 113 33.
 = NPAESH + 10,00 000 .
(1-Tax Rate)
WANES 1000000 X from the date of issue of d)

-
10/ convertible Debentures =
100.00 .
000
(fV 100)
= No =
100 000
,
deb
.

↓
still
currently
debentures

Each debenture will be converted into 10

Equity shares
.

rest

S
=
Convertible Deb
-
-N
D =

AES
=

convertible
PSN wh

options
-Noxwi
share
 a) Basic EPS for 2016-2017

AES =OOO
=

22
=

X1
T

for
2) Basic EPS 1-18
(Right Issue)

-
- NPAESH
-

+2000
WANES

Bonus
Right shar
a

↓ ↓
8112 12/12
= 162180 = 37820
-
1

1) fair Value of EquityShare after

RightIssue
1000000 X 32 +
200 000 X25
=

1200000
-

= 30 83 .

2) calculation of Bonus shares

a) fair value / Share after Right Issue = 30 83 .

1 - 30 83
.

b) Amount (funds) raised through R-1 =

.00 000
50 ,

2 5000000

2) Effective shares to be issued at fair y = 162 ,

180
= 162180sh
-
-
. =200000 X25)
-

issued = 200
, 000
d) Total share -
200000 Sh.
37820sh
31820sh
.
:

Bonus issued Bones sh .

e) shares -
!
.

=
↑

3) Calculation of Basic EPS

-PAESH -3000000
=

WANES
162180X 37820
t
X
1000000 x 12 + +
- - -

12

= 3000000
-

1145940
.

I 2 .

62/sh-
 Calculation of restated for 16-17
b) EPS

2200000
E
=A -

1000000 X1 + 37820X
12 12

z 2% 2
 AS-20: EARNING PER SHARE

STUDENT
2. Convertible preference shares:
NOTES
Increase in earnings on conversion = Preference dividend + dividend
distribution tax

= (8,00,000 x 8) + 10% (8,00,000 x 8) = ₹70,40,000 Number of shares issued on

conversion = 8,00,000 x 2 = 16,00,000 shares

3. Convertible debentures:
Increase in earnings on conversion= Interest - tax savings

= (₹ 10,00,00,000 X 12 % ) - 30% (₹ 10,00,00,000 x 12% )

= ₹84,00,000

Number of shares issued on conversion = 10,00,000 x 4 = 40,00,000 shares

Calculation of Incremental earnings per share and allocation of rank:

Potential equity share Incremental Increase in Increment Rank

earnings (A) (₹) shares (B) al

= = O
EPS (A/B)

O
-
Options
=> E
Nil 20,000
-
-
O
0 -
-
1

Convertible preference NP = 70,40,000 N= 16,00,000 ₹4.40 3

-

shares I
-

Convertible debentures NP 84,00,000 -

-
40,00,000
-
-
₹2.10
-
-
2
-

Calculation of diluted EPS:

Quote: As per the provisions of AS-20: Earnings Per Share, the entity should
compute the diluted EPS in the ranking sequence

1 Calculation of incremental EPS from potential Es

Amount raised
a Options 1) through options = ,0000
600
-

75
1) fair
=
value Ish

# shares to be issued = 80000-

issued 100
, 000
#) Actual
=
shares -

issued 20000
) Bonus
I
shares -

Earning
% 1st Rank
Incremental EPS = Incremental = 0 -

- of Sh
0
Incremental No

123
 ↓ Convertible Preference shares

Incremental EDS =
6400000,
+ 640000
- =
404 => 3rd Rank
1600000
-

C.
Convertible Debentures

Incremental EDS =
12000000
-
3600000
- :
2-1 and Rank

4000000
-

Calculation of Diluted EPS

a Options >
- ES
= 10000000 + 0
-1

2000000 + 20000-

= 4 95
-
>
-
Dinutive
-

b
=
.
Convertible Debentures
- ES

= 10000000 +
-
8400 000 ,

2000000 + 4000000 ↑
&

=
3 06 .
- Dinutive

C . Convertible
Preference shares - Es

7040000
=
18400 000 ,
+
-

6020000 + 1600000
-

= 3 34
. - Anti Dilutive -> to be
ignored.