FAR Q1

• Earnings per share is the determinant of the market price of ordinary share, thus indicating attractiveness of ordinary share as an investment
• Two types of Earnings per Share: Basic Earnings per Share and Diluted Earnings per Share
• BEPS = (Net Income - Preference Dividends) / Weighted Average Number of Ordinary Share Outstanding
• WAOS means Weighted average number of Ordinary Shares Outstanding
• Preference Dividends

  Non-cumulative, Declared = current only

  Non-cumulative, Not Declared = ignore

  Cumulative, Declared = current only

  Cumulative, Not Declared = current only
• Weighted Average Shares

  Ordinary Shares Issued: Exchange for Cash

  Date of Issue: When Cash is Receivable
• Weighted Average Shares

  Ordinary Shares Issued: Conversion of Debt Instrument

  Date of Issue: Date that interest ceases to accrue
• Weighted Average Shares

  Ordinary Shares Issued: In place of interest / principal on other financial instruments

  Date of Issue: Date that interest ceases to accrue
• Weighted Average Shares

  Ordinary Shares Issued: Exchange for settlement of liability

  Date of Issue: Settlement Date
• Weighted Average Shares

  Ordinary Shares Issued: Acquisition of an Asset

  Date of Issue: Date that acquisition is recognized
• Weighted Average Shares

  Ordinary Shares Issued: Rendering of services to the entity

  Date of Issue: Date that services are rendered
• Weighted Average Shares

  Ordinary Shares Issued: Part of purchase consideration of business combination

  Date of Issue: Date of acquisition
• Weighted Average Shares

  Ordinary Shares Issued: Conversion of mandatory convertible instrument

  Date of Issue: Date that contract is entered into
• Weighted Average Shares

  Ordinary Shares Issued: Subscribed ordinary shares or partly paid shares

  Date of Issue: On the date of subscription
• Share Split / Share Dividends


  The effect happens on WAOS
• Share Split / Share Dividends

  Shares are adjusted as of the share dividends and/or share split occurred at the beginning of the reporting period.
• Dilution arises when the inclusion of the potential ordinary shares decreases the basic earnings per share or increases the basic loss per share.
• DEPS (as if scenario)


  Convertible preference share is converted into ordinary share
• • DEPS (as if scenario)


  Convertible bond payable is converted into ordinary share
• DEPS (as if scenario)


  Share Options and Warrants are excercise
• DEPS

  Convertible Preference Shares to Preference Dividends

  Convertible Bonds Payable and Share Options & Warrants to WAOS
• Convertible Bond Payable assumes that the preference share is converted into ordinary shares.
• DEPS - Convertible Preference Shares


  (Net Income) / WAOS + Ordinary Shares issued if Preference Shares are converted
• Convertible Preference Shares

  Numerator: Do not deduct preference dividends

  Denominator: The issuance date of the convertible preference shares is the basis for the number of months outstanding in the weighted average shares computation
• DEPS - Convertible Bond Payable

  (Net Income - Preference Dividends + Interest Expense, net of tax) / WAOS + Ordinary shares issued of bonds are converted
• Convertible Bonds Payable


  Numerator: + Interest expense, net of tax (take note of the issuance date)

  Denominator: The issuance date of the convertible bonds is the basis for the number of months outstanding in the weighted average shares computation.
• Share options are granted to employees enabling them to acquire ordinary shares of the entity at a specified price during a definite period of time.
• Share warrants are granted to shareholders enabling them to acquire ordinary shares of the entity at a specified price during a definite period of time.
• DEPS - Options and Warrants

  Denominator: Shares from the option exercise - [(shares from the option exercise x Option price) / market value]
• DEPS - Options and Warrants


  It is important to take note of issuance date and exercise date
• Income


  Include both revenues ans gains.
• On sale of goods,

  The entity has transferred to the buyer the significant risks and rewards of ownership of the goods.
• On sale of goods, the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold
• On sale of goods and services, The amount of revenue can be measured reliably.
• On sale of goods and services, It is probable that the economic benefit associated with the transaction will flow to the entity.
• On sale of goods, The costs incurred or to be incurred in respect of the transaction can be measured reliably.
• On services, The stage of completion of the transaction at the balance sheetdate can be measured reliably
• On services, The costs incurred for the transaction and the costs to completethe transaction can be measured reliably.
• Income


  There is evidence of an arrangement between buyer and seller.
• Income

  The product has been delivered, or the service has been rendered.