Contingently issuable ordinary shares
IAS 33 includes contingently issuable ordinary shares in basic EPS from the date when all necessary conditions are satisfied. Before that date, assess whether and how the shares affect diluted EPS under the standard’s specific rules, treating the end of the reporting period as the end of the contingency period for applicable calculations. Employee options or other instruments should not be labelled contingently issuable shares without examining their terms and the IAS 33 definitions.
Worked example
An acquisition agreement requires 10,000 additional ordinary shares to be issued for no further payment if a specified profit target is met. When all issuance conditions are satisfied, include the shares in basic EPS from that date; consider diluted EPS before that date under IAS 33.
Common mistake
Including contingent shares in basic EPS merely because a target might be achieved, or assuming every employee option is a contingently issuable share.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Supporting | September 2026–June 2027 |
| ACCA | SBR | Supporting | September 2026–June 2027 |