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Commission Regulation
(EC) No 2238/2004 of 29 December 2004 amending
Regulation (EC) No 1725/2003 adopting certain
international accounting standards in accordance with
Regulation (EC) No 1606/2002 of the European Parliament
and of the Council, as regards IASs IFRS 1, IASs Nos 1
to 10, 12 to 17, 19 to 24, 27 to 38, 40 and 41 and SIC
Nos 1 to 7, 11 to 14, 18 to 27 and 30 to 33
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Participating Equity
Instruments and Two-Class Ordinary Shares
A13. The equity of
some entities includes:
(a) instruments that
participate in dividends with ordinary shares according to a
predetermined formula (for example, two for one) with, at
times, an upper limit on the extent of participation (for
example, up to, but not beyond, a specified amount per share).
(b) a class of
ordinary shares with a different dividend rate from that of
another class of ordinary shares but without prior or senior
rights.
A14. For the purpose
of calculating diluted earnings per share, conversion is
assumed for those instruments described in paragraph A13 that
are convertible into ordinary shares if the effect is
dilutive. For those instruments that are not convertible into
a class of ordinary shares, profit or loss for the period is
allocated to the different classes of shares and participating
equity instruments in accordance with their dividend rights or
other rights to participate in undistributed earnings. To
calculate basic and diluted earnings per share:
(a) profit or loss
attributable to ordinary equity holders of the parent entity
is adjusted (a profit reduced and a loss increased) by the
amount of dividends declared in the period for each class of
shares and by the contractual amount of dividends (or interest
on participating bonds) that must be paid for the period (for
example, unpaid cumulative dividends).
(b) the remaining
profit or loss is allocated to ordinary shares and
participating equity instruments to the extent that each
instrument shares in earnings as if all of the profit or loss
for the period had been distributed. The total profit or loss
allocated to each class of equity instrument is determined by
adding together the amount allocated for dividends and the
amount allocated for a participation feature.
(c) the total amount
of profit or loss allocated to each class of equity instrument
is divided by the number of outstanding instruments to which
the earnings are allocated to determine the earnings per share
for the instrument. For the calculation of diluted earnings
per share, all potential ordinary shares assumed to have been
issued are included in outstanding ordinary shares.
Partly Paid Shares
A15. Where ordinary
shares are issued but not fully paid, they are treated in the
calculation of basic earnings per share 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.
A16. To the extent
that partly paid shares are not entitled to participate in
dividends during the period they are treated as the equivalent
of warrants or options in the calculation of diluted earnings
per share. The unpaid balance is assumed to represent proceeds
used to purchase ordinary shares. The number of shares
included in diluted earnings per share is the difference
between the number of shares subscribed and the number of
shares assumed to be purchased.
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