12 October 2007
For calculating EPS preference shares will not be considered. Preference Shares will carry assured rate of dividend and it will be having preferencial right over the equity shares when the question of payment of dividend arises. The preference shareholders shall be paid agreed rate of dividend when company having the profits. However, equity shareholders neednot be paid dividend even though the company have profit.
More importantly, when the preference share carries assured persentage of dividend, question of EPS will not arise.
12 October 2007
Calculating EPS is not referred in any Section. However, Schedule VI of the Companies Act requires disclosure of EPS. Accounting Standeed 20 states EPS is to be calculated on after providing for preference dividend. Even International Accounting Standard 33 also state the same (You may refer both).
12 October 2007
Normally Share Application Money should be equity only. For the purpose of EPS only fully paid Equity Share should be considered. Share application Money is a pending allotment which is to be transferred to Paid up capital. For EPS Preference sharges are not to be considered.
12 October 2007
I agree with your opinion, since Equity Share Application money is potential equity share. However, In case you receive application money under book building route pending fixing of final price per share on the basis of bidding, how will you consider for calculating EPS?
17 October 2007
No, I will not consider share application money as potential equity since allotment is a contingent event (this opinion is purly personal)
CAclubindia
