IAS 33Chapter 6Lesson 1
Diluted earnings: principle, numerator and convertible instruments
Step 1 of 6Learning objectives
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Diluted earnings assumes dilutive potential shares are converted: the numerator recovers the expenses that would disappear (after tax) and the denominator adds the shares that would be issued, from the start of the period or the issue date.
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Learning objectives
- Explain the principle of diluted earnings per share.
- Adjust the numerator for the after-tax effects of an assumed conversion.
- Determine the additional shares of a convertible instrument, including one issued during the period.
- Place the tax effect in the adjustment.