On 1 April 2025, ABC Limited has given the following information: 50,000 equity shares of 100 each (80paid up by all shareholders) 40,00,000…

Basic Earnings per share (EPS) = Net profit attributable to equity shareholders / Weighted average number of equity shares outstanding during the year = 1,84,000 / 46,000 Shares (as per working note) = 4 per share Diluted earnings per share Net profit for the current year 3,44,000 No. of equity shares outstanding 50,000 Basic earnings per share 4 No. of 12% convertible debentures of 100each 10,000 Each debenture is convertible into 3 equity shares Interest expense for the current year 1,20,000 Tax relating to interest expense (30%) 36,000 Adjusted net profit for the current year ₹ (1,84,000 + 1,20,000 - 36,000) = 2,68,000 No. of equity shares resulting from conversion of debentures 30,000 No. of equity shares used to compute diluted earnings per share 46,000 + 30,000 = 76,000 Diluted earnings per share 2,68,000 / 76,000 = 3.53 Working Note: 1. Net profit attributable to equity share holders = Net profit less preference dividends Total earnings - preference shares dividend 3,44,000 – ₹ (8% x 20,00,000) 3,44,000 -1,60,000 = 1,84,000 2. Calculation of weighted average number of equity shares As per AS 20 'Earnings Per Share', partly paid equity shares are treated as a fraction of equity share to the extent that they were entitled to participate in dividend relative to a fully paid equity share during the reporting period. Assuming that the partly paid shares are entitled to participate in the dividend to the extent of amount paid, weighted average number of shares will be calculated as follows: Date No. of equity shares Amount paid per share Weighted average no. of equity shares 01.04.2025 50,000 80 50,000x 80/100x 3/12 = 10,000 01.07.2025 40,000 100 40,000 x 9/12 = 30,000 01.07.2025 10,000 80 10,000x 80/100 x 9/12 = 6,000 Total weighted average equity shares 46,000