[(h)] 200,000 shares × CU0.05

[(i)] CU55×600,000 = CU33,000,000; CU33,000,000 ÷ CU60 = 550,000; 600,000 – 550,000 = 50,000 shares OR [(CU60-CU55) ÷ CU60] × 600,000 shares = 50,000 shares

[(j)] (800,000 shares × 2/3) + (200,000 shares× 1/3)
Third Quarter 20X1
Basic EPS calculation
     CU
Profit from continuing operations attributable to the parent entity    1,000,000
Less: preference shares dividends    (10,000)
Profit from continuing operations attributable to ordinary equity holders of the parent entity    990,000
Loss from discontinuing operations attributable to the parent entity    (2,000,000)
Loss attributable to ordinary equity holders of theparent entity    (1,010,000)
Dates    Shares outstanding    Fraction of period    Weighted- average shares
1 July - 31 August    6,280,000    2/3    4,186,666
Exercise of warrants on 1 September    600,000          
1 September -30 September    6,880,000    1/3    2,293,333
Weighted-average shares              6,480,000
Basic EPS              
Profit from continuing operations         CU0.15
Loss from discontinuing operations         (CU0.31)
Loss    (CU0.16)
Diluted EPS calculation

(g) 200,000 shares×CU0.05
Diluted EPS calculation              
Profit attributable to ordinary equity holders of the parent entity              CU6,490,000
Plus: profit impact of assumed conversions              
Preference share dividends    CU10,000    (h)    
Effect of assumed conversions              CU10,000
Profit attributable to ordinary equity holders of the parent entity including assumed conversions              CU6,500,000
Weighted-average shares              5,880,000
Plus: incremental shares from assumed conversions              
Warrants    50,000    (i)    
Convertible preference shares    600,000    (j)    
Dilutive potential ordinary shares              650,000
Adjusted weighted-average shares              6,530,000
Diluted EPS              CU1.00

(d) 800,000 shares×CU0.05

(e) (CU12,000,000×5%) ÷ 4; less taxes at 40%

(f) The warrants were not assumed to be exercised because they were antidilutive in the period (CU55 [exercise price] > CU49 [average price]).
Second Quarter 20X1
Basic EPS calculation
     CU    
Profit from continuing operations attributable to the parent entity    6,500,000    
Less: preference shares dividends    (10,000)    [(g)]
Profit attributable to ordinary equity holders of the parent entity    6,490,000    
Dates    Shares outstanding    Fraction of period    Weighted- average shares
1 April    5,200,000          
Conversion of 5% bonds on 1 April    480,000          
1 April - 31 May    5,680,000    2/3    3,786,666
Conversion of preference shares on 1 June    600,000          
1 June - 30 June    6,280,000    1/3    2,093,333
Weighted-average shares         5,880,000
Basic EPS              CU1.10

(a) This is the control number (before adjusting for preference dividends).

(b) Company A had a CU2,000,000 loss (net of tax) from discontinuing operations in the third quarter.

(c) 800,000 shares × CU0.05
Diluted EPS calculation
Profit attributable to ordinary equity holders of the parent entity              CU4,960,000
Plus: profit impact of assumed conversions              
Preference share dividends    CU40,000    (d)    
Interest on 5% convertible bonds    CU90,000    (e)    
Effect of assumed conversions              CU130,000
Profit attributable to ordinary equity holders of the parent entity including assumed conversions              CU5,090,000
Weighted-average shares              5,066,666
Plus: incremental shares from assumed conversions              
Warrants    0    (f)    
Convertible preference shares    800,000          
5% convertible bonds    480,000          
Dilutive potential ordinary shares              1,280,000
Adjusted weighted-average shares              6,346,666
Diluted EPS              CU0.80

Tax rate: The tax rate was 40 per cent for 20X1.
20X1    Profit (loss) from continuing operations attributable to the parent entity [(a)]    Profit (loss) attributable to the parent entity
    CU    CU
First quarter    5,000,000    5,000,000
Second quarter    6,500,000    6,500,000
Third quarter    1,000,000    (1,000,000)
Fourth quarter    (700,000)    (700,000)
Full year    11,800,000    9,800,000
First Quarter 20X1
Basic EPS calculation
     CU    
Profit from continuing operations attributable to the parent entity    5,000,000    
Less: preference shares dividends    (40,000)    (c)
Profit attributable to ordinary equity holders of the parent entity    4,960,000    
Dates    Shares Outstanding    Fraction of period    Weighted- average shares
1 January28 February    5,000,000    2/3    3,333,333
Issue of ordinary shares on 1March    200,000          
1 March31 March    5,200,000    1/3    1,733,333
Weighted-average shares              5,066,666
Basic EPS              CU0.98

Convertible preference shares: In the second quarter of 20X0, 800,000 convertible preference shares were issued for assets in a purchase transaction. The quarterly dividend on each convertible preference share is CU0.05, payable at the end of the quarter for shares outstanding at that date. Each share is convertible into one ordinary share. Holders of 600,000 convertible preference shares converted their preference shares into ordinary shares on 1 June 20X1.
Warrants: Warrants to buy 600,000 ordinary shares at CU55 per share for a period of five years were issued on 1 January 20X1. All outstanding warrants were exercised on 1 September 20X1.
Options: Options to buy 1,500,000 ordinary shares at CU75 per share for a period of 10 years were issued on 1 July 20X1. No options were exercised during 20X1 because the exercise price of the options exceeded the market price of the ordinary shares.

Average market price of ordinary shares:The average market prices of ordinary shares for the calendar year 20X1 were as follows:
First quarter    CU49
Second quarter    CU60
Third quarter    CU67
Fourth quarter    CU67
The average market price of ordinary shares from 1 July to 1 September 20X1 was CU65.
Ordinary shares: The number of ordinary shares outstanding at the beginning of 20X1 was 5,000,000. On 1 March 20X1, 200,000 ordinary shares were issued for cash.
Convertible bonds: In the last quarter of 20X0, 5 per cent convertible bonds with a principal amount of CU12,000,000 due in 20 years were sold for cash at CU1,000 (par). Interest is payable twice a year, on 1 November and 1 May. Each CU1,000 bond is convertible into 40 ordinary shares. No bonds were converted in 20X0. The entire issue was converted on 1 April 20X1 because the issue was called by Company A.

Example 12 - Calculation of Basic and Diluted Earnings per Share and Income Statement Presentation (Comprehensive Example) [9]
This example illustrates the quarterly and annual calculations of basic and diluted earnings per share in the year 20X1 for Company A, which has a complex capital structure. The control number is profit or loss from continuing operations attributable to the parent entity. Other facts assumed are as follows:
9 This example does not illustrate the classification of the components of convertible financial instruments as liabilities and equity or the classification of related interest and dividends as expenses and equity as required by IAS 32.

After ordinary shares have been paid a dividend of CU2.10 per share, the preference shares participate in any additional dividends on a 20:80 ratio with ordinary shares (ie after preference and ordinary shares have been paid dividends of CU5.50 and CU2.10 per share, respectively, preference shares participate in any additional dividends at a rate of one-fourth of the amount paid to ordinary shares on a per-share basis).
Dividends on preference shares paid    CU33,000    (CU5.50 per share)
Dividends on ordinary shares paid    CU21,000    (CU2.10 per share)
Basic earnings per share is calculated as follows:
      CU    CU
Profit attributable to equity holders of the parent entity         100,000
Less dividends paid:          
Preference    33,000    
Ordinary    21,000    
           (54,000)
Undistributed earnings          46,000
Allocation of undistributed earnings:
Allocation per ordinary share    = A
Allocation per preference share    = B; B = 1/4 A
     (A 10,000) + (1/4 A 6,000) = CU46,000
     A = CU46,000 ÷ (10,000 + 1,500)
     A = CU4.00
     B = 1/4 A
     B = CU1.00
Basic per share amounts:
     Preference shares    Ordinary shares
Distributed earnings    CU5.50    CU2.10
Undistributed earnings    CU1.00    CU4.00
Totals    CU6.50    CU6.10

Example 11 - Participating Equity Instruments and Two-class Ordinary Shares [8]
Reference: IAS 33, paragraphs A13 and A14
8 This example does not illustrate the classification of the components of convertible financial instruments as liabilities and equity or the classification of related interest and dividends as expenses and equity as required by IAS 32.
Profit attributable to equity holders of the parent entity    CU100,000
Ordinary shares outstanding    10,000
Non-convertible preference shares    6,000
Non-cumulative annual dividend on preference shares (before any dividend is paid on ordinary shares)    CU5.50 per share