Principle of diluted earnings per share

Learning objectives

• Explain that diluted earnings per share adjust the numerator and the denominator for the effects of all dilutive potential ordinary shares.L3

Normative references

• IAS 33 §31For the purpose of calculating diluted earnings per share, an entity adjusts profit or loss attributable to ordinary equity holders of the parent, and the weighted average number of shares outstanding, for the effects of all dilutive potential ordinary shares.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

2 questions

• Diluted earnings per share is calculated by adjusting the weighted average number of shares for the effects of dilutive potential ordinary shares, the profit attributable to ordinary equity holders remaining that of basic earnings.L3
• Which statements correctly describe the calculation of diluted earnings per share? More than one answer is possible.L3