This free, guided checker walks your finance team through the key decision points for IAS 33 Basic and Diluted Earnings Per Share. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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IAS 33 applies to entities whose ordinary shares or potential ordinary shares are publicly traded or that file financial statements for the purpose of issuing instruments in a public market. It also captures entities in the process of filing with a securities regulator for a public issuance, and an entity that voluntarily discloses EPS must compute and present it fully under IAS 33 (IAS 33.3-4). Check over-the-counter and local markets as well as formal exchanges - a public market is broader than a stock exchange listing (IAS 33.2).
IAS 33 EPS presentation is not required unless ordinary shares become publicly traded or a public-market filing is made (IAS 33.2).
Official guidance: IFRS issued standards
Potential ordinary shares include convertible debt, convertible preference shares, options, warrants, and contingently issuable shares that may convert into ordinary shares. Build the inventory from debt agreements, preference share terms, employee award plans, and business combination earn-outs rather than the share register alone (IAS 33.5-7). Contracts that may be settled in ordinary shares or cash are presumed settled in shares for diluted EPS even when cash settlement is expected (IAS 33.58).
Confirm whether any instrument could become a potential ordinary share before omitting EPS (IAS 33.5-7).
Official guidance: IFRS issued standards
When continuing operations show a loss attributable to ordinary equity holders, including potential ordinary shares would reduce the loss per share, so they are anti-dilutive and excluded (IAS 33.41; IAS 33.43). Diluted EPS is still presented but equals basic EPS. Use profit or loss from continuing operations as the control number for the dilution test when discontinued operations are also reported (IAS 33.42).
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Official guidance: IFRS issued standards
The weighted average adjusts for shares issued or repurchased during the period with a time-weighting factor and excludes treasury shares from the denominator. Include new shares from the date consideration is receivable, which is generally their issue date (IAS 33.21). Adjust all periods retrospectively for bonus issues, splits, and share consolidations that change the number of shares without a corresponding change in resources (IAS 33.26-28); a period-end share count is not an acceptable shortcut.
Present basic EPS and a diluted EPS equal to basic in the loss period; anti-dilutive potential shares are excluded (IAS 33.41; IAS 33.43). Complete the weighted average share denominator under IAS 33.19-20 before publishing EPS in a loss period.
Official guidance: IFRS issued standards
Options and similar instruments are included in diluted EPS using the treasury stock method when they are dilutive, reflecting proceeds that could be used to repurchase shares at average market price. For employee share options and other share-based payments, assumed proceeds include the unrecognised cost of goods or services still to be received, which raises the effective exercise price (IAS 33.47A). Options and warrants are dilutive only when the average market price for the period exceeds the exercise price, so a period-end intrinsic-value check is not a valid shortcut (IAS 33.47).
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Official guidance: IFRS issued standards
Anti-dilutive potential ordinary shares are excluded from diluted EPS; entities disclose instruments excluded because they are anti-dilutive when material. Options and warrants are dilutive only when the average market price of ordinary shares during the period exceeds the exercise price (IAS 33.47). Disclose instruments that could dilute EPS in the future but were anti-dilutive for the period presented (IAS 33.70(c)).
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Official guidance: IFRS issued standards
Contingently issuable ordinary shares are included in diluted EPS from the date when the condition is satisfied or from the start of the period when the condition is met during the period, using the if-converted method where applicable. If the conditions are not satisfied at period end, include only the shares that would be issuable if the end of the reporting period were the end of the contingency period, based on results to date rather than forecasts (IAS 33.52-53). Earn-out arrangements settled only in cash never enter the share computation.
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Official guidance: IFRS issued standards
Shares contingently issuable on earnings or revenue targets are included in diluted EPS when the condition is met by period end or would have been met assuming the end of the reporting period. For basic EPS the shares enter the denominator only from the date all necessary conditions are actually satisfied (IAS 33.24). Apply the period-end test on cumulative results to date - do not project future earnings when measuring whether the target would be met (IAS 33.52-53).
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Official guidance: IFRS issued standards
When multiple classes of ordinary shares exist, basic and diluted EPS are calculated for each class by allocating profit attributable to ordinary equity holders between classes. Follow the two-stage allocation in IAS 33.A14: attribute declared dividends and contractual entitlements to each class first, then allocate the remaining profit or loss as if all of it were distributed under each class's participation rights. Participating equity instruments that are not ordinary shares also absorb earnings in this allocation before per-share amounts are computed (IAS 33.A13).
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Official guidance: IFRS issued standards
Allocation follows the rights of each class to participate in profit, including any priority or capped returns before residual ordinary shareholders receive earnings. Divide each class's allocated total by that class's own weighted average shares outstanding to produce per-class basic and diluted amounts (IAS 33.A14). Test the allocation against the articles and shareholder agreements rather than historical dividend practice, and tie the sum of the class allocations back to the consolidated result.
Complete the multi-class profit allocation per IAS 33.A14 before publishing EPS by class.
Official guidance: IFRS issued standards
Diluted EPS adjusts both the numerator for effects of conversion and the denominator for additional ordinary shares, ranking potential shares from most to least dilutive when multiple instruments exist. Numerator adjustments add back the after-tax dividends, interest, and other income or expense changes that would result from conversion (IAS 33.33). Test each series against profit from continuing operations as the control number, so an instrument anti-dilutive against continuing operations is excluded even if it appears dilutive against total profit (IAS 33.42-44).
Complete the diluted EPS workbook, sequencing instruments from most to least dilutive per IAS 33.44, before authorization.
Official guidance: IFRS issued standards
IAS 33.64 requires restated basic and diluted EPS for all prior periods presented when comparatives are restated under IAS 8 for errors or accounting policy changes. The same paragraph requires retrospective adjustment of the denominator for capitalisations, bonus issues, share splits, and reverse splits, including those occurring after the reporting period but before the financial statements are authorised for issue. Do not restate prior-period diluted EPS for changes in assumptions or for subsequent conversions of potential ordinary shares (IAS 33.65).
Restate basic and diluted EPS for all comparative periods and disclose the restatement (IAS 33.64). Present basic and diluted EPS for current and comparative periods with equal prominence on the face (IAS 33.66).
Official guidance: IFRS issued standards
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