IAS 33 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
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Diluted earnings per share: adjustments, dilutive instruments, ranking by incremental earnings per share and stop at the antidilutive effect: Bonds settleable in shares
File of a listed group: continuing and discontinued operations, contingent shares, written put, share or cash settlement, presentation and disclosures
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 33 workpaper
- Level
- Expert
- Estimated time
- ≈ 75 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Ardolia Group SA (fictitious entity), a listed parent, closes its consolidated accounts on 31 December 20X6. The group disposed of a line of business (discontinued operation), made a rights issue in April, has a contingent share agreement, put options written on its own shares and bonds settleable in shares or cash; a share issue took place after the reporting date. Management prepares earnings per share and the disclosures.
Assignment
Ranking of the instruments and diluted earnings per share from continuing operations
Purpose of the workpaper
For each instrument, compute the numerator adjustment after tax and the incremental shares (weighted conversion, treasury stock method, written put, contingent shares), compute the incremental earnings per share, rank the instruments from the lowest to the highest and compare cumulated earnings per share before and after each instrument: an instrument that does not decrease earnings per share is excluded. Document the judgments and prepare the entries and the note. Amounts, prices and rates are case data; comparisons use earnings per share rounded to two decimals (case convention).
Questions of the file covered by this workpaper
- Compute the contingent shares retained in diluted earnings per share.
- Compute the incremental shares of the written puts.
- Compute basic earnings per share from continuing operations and the numerator adjustment after tax for the contract settleable in shares or cash.
- Compute the incremental earnings per share of the three instruments.
- Rank the instruments and compute the cumulated number of shares and numerator at each step.
- Compute earnings per share from continuing operations at each step.
- Compare each step with the previous one and retain the lower earnings per share.
- Record the payment of the interest on the bonds settleable in shares or cash.
- Is the contract settleable in shares or cash retained in diluted earnings per share, and does the test change if it is performed on the total result?
Documents in the file
Open the documents to pick out the relevant information.