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
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |
