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Thank you for the explanation Sir,
its clear now…,but why then in IAS 33 is written that way:
“Basic EPS
…
The earnings numerators (profit or loss from continuing operations and net profit or loss) used for the calculation should be after deducting all expenses including taxes, minority interests, and preference dividends. [IAS 33.12]”it sounds to me as we always use Profit or loss from continuing operations only without discontinued…
Im sorry to bother you again about this, but its important for me to have no doubts about it if I meet this kind of question on the exam.
The way I teach it and the way I remember it is to talk in terms of “profits available for equity shareholders”
Now clearly tax has to be deducted in arriving at that figure
But so too we have to deduct the element of earnings that is attributable to the nci (eps in consolidations not in F7 syllabus)
And obviously we need to deduct the amount that is attributable to the preference shareholders in the process of calculating the numerator for the earnings attributable to the equity shareholders
This adjustment of deducting the profits from discontinued operations is only done for the purposes of calculating the diluted eps and to see whether any of those dilutions are anti-dilutive
Once we know which diluting instruments that we should include in the deps calculation, we revert back to profit after tax, after nci and after preference share entitlements for the final calculations
Does that make sense to you now?
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