Reconciliation of numerators and denominators

Learning objectives

• Prepare the reconciliation of the numerators and denominators of basic and diluted earnings per share, with the effect of each class of instruments.L3, L4

Normative references

• IAS 33 §70Disclosures (a): the amounts used as the numerators in calculating basic and diluted earnings per share, reconciled to profit or loss attributable to the parent, with the individual effect of each class of instruments; (b): the weighted average number of ordinary shares used as the denominator in calculating basic and diluted earnings per share, with a reconciliation of these denominators to each other showing the individual effect of each class of instruments.

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

3 questions

• In the earnings per share note of Coteaux SA, the basic weighted average number of shares is {basic_shares}. The individual effects of the categories of dilutive instruments on the denominator are: options (treasury stock method) {options_effect}; convertible bonds {convertible_effect}; contingent shares {contingent_effect}. Calculate the number of shares in the denominator of diluted earnings, as it emerges from the reconciliation of denominators.L3
• To prepare the reconciliation required in the earnings per share note, Hautes-Terres SA has the following data (in euros): profit attributable to the parent before preference dividends {profit_parent}; preference dividends after tax {pref_dividends}; interest on a dilutive convertible bond, removed after tax, {after_tax_interest}; basic weighted average number of shares {basic_shares}; effect of the options {options_effect}; effect of the convertible bond {convertible_effect}. Calculate the diluted numerator, the diluted denominator and diluted earnings per share. Round earnings per share to two decimals (case convention).L4
• The accounting department of Vignoble SA prepares the earnings per share reconciliation table (in euros): profit attributable to the parent before preference dividends {profit_parent}, of which {pref_dividends} of preference dividends after tax are to be deducted; a dilutive convertible bond whose interest after tax of {after_tax_interest} would disappear on conversion; a basic weighted average number of shares of {basic_shares}, to which are added {options_effect} shares for the options and {convertible_effect} for the bond. Establish the diluted numerator, the diluted denominator and diluted earnings per share. Round earnings per share to two decimals (case convention).L4