Skip to contentSkip to search

Preference dividends in earnings per share

For equity-classified non-cumulative preference shares, deduct after-tax preference dividends declared for the period. For cumulative preference shares, deduct the after-tax amount required for the period whether or not declared; do not deduct cumulative dividends for earlier periods that were declared or paid in the current period. Classification and any tax effects matter; ordinary EPS is not the earnings per preference share.

Worked example

Profit attributable to the parent is $500,000, including $40,000 attributable to cumulative equity preference shares for this period. With 200,000 weighted-average ordinary shares, basic EPS is ($500,000 − $40,000) / 200,000 = $2.30.

Common mistake

Failing to deduct the current cumulative dividend because it was not declared, or deducting arrears for an earlier period again.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA FR Direct September 2026–June 2027
ACCA SBR Direct September 2026–June 2027