Page 3 - 21. COMPILER QB - INDAS 33

(iii) Also, paragraph 9 of the standard states that an entity shall calculate basic earnings per share amounts

for profit or loss attributable to ordinary equity holders of the parent entity and, if presented, profit or loss
from continuing operations attributable to those equity holders.

(iv) Further, paragraph A1 of Appendix A of Ind AS 33 states that for the purpose of calculating earnings per

share based on the cfs, profit or loss attributable to the parent entity refers to profit or loss of the
consolidated entity after adjusting for non- controlling interests.

Hence, with inference from above mentioned points, in the given case, the presentation of Basic EPS by the
Accountant of P Ltd. on the basis of consolidated financial statements in its separate financial statements is

not correct. The correct presentation of Basic EPS would be as follows:
Calculation of Basic EPS of P Ltd. in SFS

Net Profit after tax Rs 20,00,000
No. of share issued 2,00,000 shares
Basic EPS Rs 10 per share

Q2. (RTP MAY 19 & MTP OCT. 20)

An entity issues 2,000 convertible bonds at the beginning of Year 1. The bonds have a three-year term, and
are issued at par with a face value of Rs 1,000 per bond, giving total proceeds of Rs 2,000,000. Interest is
payable annually in arrears at a nominal annual interest rate of 6 per cent. Each bond is convertible at any

time up to maturity into 250 ordinary shares. The entity has an option to settle the principal amount of the

convertible bonds in ordinary shares or in cash.
When the bonds are issued, the prevailing market interest rate for similar debt without a conversion option is

9 per cent. At the issue date, the market price of one ordinary share is Rs 3. Income tax is ignored.
Calculate basic and diluted EPS when

Profit attributable to ordinary equity holders of the parent entity Year 1 Rs 1,000,000
Ordinary shares outstanding 1,200,000
Convertible bonds outstanding 2,000

SOLUTION:

Allocation of proceeds of the bond issue:
Liability component (Refer Note 1) Rs 1,848,122

Equity component Rs 151,878
Rs 2,000,000

The liability and equity components would be determined in accordance with Ind AS 32. These amounts are
recognised as the initial carrying amounts of the liability and equity components. The amount assigned to the
issuer conversion option equity element is an addition to equity and is not adjusted.

Basic earnings per share Year 1:

Rs 1,000,000/ 1,200,000= Rs 0.83 per ordinary share
21. 2