23 September 2008
The following informaion is given:
Income from continuing operations before extra-ordinary items and tax: Rs. 13 Lacs
Tax Rate @ 30%
Extraordinary loss ( Net of tax) Rs. 3 Lacs
My query is whether Rs.3 Lacs extraordinary loss has to be deducted from Rs.13 Lacs and tax has to be calculated on the remaining Rs. 10 Lacs? Kindly advice.
Paragraph 48 of AS 20 has been decided to be modified as under (modifications made are shown as underlined): “48. In addition to disclosures as required by paragraphs 8, 9 and 44 of this Statement, an enterprise should disclose the following: (i) where the statement of profit and loss includes extraordinary items (within the meaning of AS 5, Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies), the enterprise should disclose basic and diluted earnings per share computed on the basis of earnings excluding extraordinary items (net of tax expense); and (ii) (a) the amounts used as the numerators in calculating basic and diluted earnings per share, and a reconciliation of those amounts to the net profit or loss for the period; (b) the weighted average number of equity shares used as the denominator in calculating basic and diluted earnings per share, and a reconciliation of these denominators to each other; and (c) the nominal value of shares along with the earnings per share figures.” As a consequence to the above, it has been decided to make the following modification in paragraph 51 of AS 20 (modifications made are shown in strike-through form): “51. An enterprise may wish to disclose more information than this Statement requires. Such information may help the users to evaluate the performance of the enterprise and may take the form of per share amounts for various components of net profit., e.g., profit from ordinary activities. Such disclosures are encouraged. However, when such amounts are disclosed, the denominators need to be calculated in accordance with this Statement in order to ensure the comparability of the per share amounts disclosed.” The limited revisions come into effect in respect of accounting periods commencing on or after 1-4-2004. General Clarification (GC) – 10/2002, Disclosure of Earnings Per Share figures in case of Extraordinary Items, issued by the Accounting Standards Board, in October 2002, stands withdrawn from that date. Pursuant to the above limited revisions, the applicability paragraphs of AS 20, as modified to address the matter relating to Small and Medium Sized Enterprises (see November 2003 issue of the Institute’s Journal, Pp. 486 and 487), stand modified, in respect of accounting periods commencing on or after 1-4-2004, as under (modifications made are shown as underlined): “Accounting Standard (AS) 20, ‘Earnings Per Share’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2001 and is mandatory in nature, from that date, in respect of enterprises whose equity shares or potential equity shares are listed on a recognised stock exchange in India. An enterprise which has neither equity shares nor potential equity shares which are so listed but which discloses earnings per share, should calculate and disclose earnings per share in accordance with this Standard from the aforesaid date. However, in respect of accounting periods commencing on or after 1-4-20041, if any such enterprise does not fall in any of the following categories, it need not disclose diluted earnings per share (both including and excluding extraordinary items) and information required by paragraph 48 (ii) of this Standard: (i) Enterprises whose equity securities or potential equity securities are listed outside India and enterprises whose debt securities (other than potential equity securities) are listed whether in India or outside India.
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