EPS in AS-20, how to implement in MSME balance sheets

EPS in AS-20, how to implement in MSME balance sheets

EPS in AS-20, how to implement in MSME balance sheets

EPS in AS-20, how to implement in MSME balance sheets

Practical aspect in case of Bonus Shares

Since in

Reference : MCA website :  https://www.mca.gov.in/Ministry/notification/pdf/AS_20.pdf

Para 24 of the AS-20 clearly says

In case of a bonus issue or a share split, equity shares are issued to existing shareholders for no additional consideration. Therefore, the number of equity shares outstanding is increased without an increase in resources. The number of equity shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event had occurred at the beginning of the earliest period reported.

For example, upon a two-for-one bonus issue, the number of shares outstanding prior to the issue is multiplied by a factor of three to obtain the new total number of shares, or by a factor of two to obtain the number of additional shares.


Last year also, you have to take the bigger denominator.

Old existing shares ; 1 lakh

bonus issue : 9:1

total 10 lakh shares


for EPS, you have to take 10 lakh shares as denominator in both years FY 22-23 and FY 23-24

AS 20Earnings Per Shares183 AS 20 Earnings per Share Comprehensive Discussion on Issues Contained In AS – 20 1. AS-20 is mandatory in naturefor all those enterprises which fall under purview of Level-I enterprises. 2.
Objective and scope Of this standard is to prescribe principles for determination and presentation of earnings per share [EPS] which will improve comparison of performances among different enterprises and among different accounting periods.
The focus of AS-20 is on the denominator of the earnings per share. Following terms are used in the standard as definedAn equity share is a share other than a preference share A preference share is a share carrying preferential right to dividends and repayment of capital A financial instrument gives rise to both a financial asset of one enterprise and financial liability or equity shares of another enterprise Fair value is the amount for which an asset could be exchanged between knowledgeable parties dealing in arm’s length transaction 3.
A potential equity share Is a financial instrument that entitles, or may entitle its holders to equity shares. Potential equity shares may arise in different cases as follows:
Debt instruments or preference shares , that are convertible into equity shares
Share warrants
Employees stock option plans under which employees of an enterprise are entitled to receive equity shares
Shares which would be issued in a situation such as the acquisition of business or other assets or shares issuable under a loan contract upon default of payment of principal or interest
184Earnings Per SharesAS 20 As a rule there are two types of earnings per shareBasic earnings per share and diluted earnings per share Basic earnings per share [BPS]Should be computed by dividing thenet profits or loss for the period attributable to equity shareholders bythe weighted average numberof equity shares outstanding during the period.
Net profit for this purpose means profit available after tax and preference dividend. The amount of preference dividend to be deducted is as follows-
The full amount of preference dividend in case of cumulative preference shares, whether or not the preference dividend has been proposed for the period.
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