Partly paid shares

Learning objectives

• Explain the treatment of partly paid shares: a fraction of an ordinary share in basic earnings per share, to the extent of their dividend entitlement, and the equivalent of options in diluted earnings per share otherwise.L3

Normative references

• IAS 33 §A15Ordinary shares issued but not fully paid: for basic earnings per share, they are treated as a fraction of an ordinary share to the extent that they were entitled to participate in dividends during the period relative to a fully paid ordinary share. Those not entitled to dividends are treated as options or warrants in diluted earnings per share (para. A16).

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

1 question

• Sorel SA has partly paid ordinary shares, outstanding throughout the year, which entitle their holders to 60% of the dividend of a fully paid ordinary share. How are they treated in the weighted average number of shares for basic earnings per share?L3