Wiley IFRS 2014: Interpretation and Application of International Financial Reporting Standards

Chapter 27EARNINGS PER SHARE

1. INTRODUCTION
2. SCOPE
3. DEFINITIONS OF TERMS
4. CONCEPTS, RULES, AND EXAMPLES
   1. Simple Capital Structure
      1. Computational guidelines
      2. Numerator
      3. Denominator
   2. Complex Capital Structure
   3. Determining Dilution Effects
      1. Options and warrants
      2. Convertible instruments
   4. Contingent Issuances of Ordinary Shares
   5. Contracts Which May Be Settled in Shares or for Cash
      1. Written put options
   6. Computations of Basic and Diluted Earnings Per Share
      1. No antidilution
   7. Presentation and Disclosure Requirements under IAS 33
5. EXAMPLES OF FINANCIAL STATEMENT DISCLOSURES
6. US GAAP COMPARISON

INTRODUCTION

Many investors and other consumers of corporate financial information find comfort in identifying a “shorthand” means of measuring an entity's performance, notwithstanding oft-voiced concerns that any condensed gauge of earnings inevitably risks being incomplete, and even misleading, as a picture of the entity's results for the period. Investors in particular are devoted users of earning per share data, which is taken by many to be the single best predictor of the entity's future performance. Ultimately, recognizing that such statistics were being computed in widely varying ways and then broadly disseminated, the accounting standard setters decided to at least impose uniform practices.

The IFRS governing the calculation and disclosure of earnings per share (EPS) is IAS 33. It requires that one measure—or two measures in the case of those reporting entities having complex capital structures—be ...