Document ID: chunk:federal_register_of_legislation:F2021C00879:body:0:p30
Version: federal_register_of_legislation:F2021C00879
Segment Type: other
Provision Reference: 
Character Range: 96432–101160

Because diluted earnings per share is increased when taking the convertible preference shares into account (from CU3.23 to CU3.45), the convertible preference shares are antidilutive and are ignored in the calculation of diluted earnings per share. Therefore, diluted earnings per share for profit from continuing operations is CU3.23:

                                                                                                Basic EPS  Diluted EPS

                                                                                                CU         CU

Profit from continuing operations attributable to ordinary equity holders of the parent entity  5.00       3.23
Loss from discontinued operations attributable to ordinary equity holders of the parent entity  (2.00)(a)  (0.99)(b)
Profit attributable to ordinary equity holders of the parent entity                             3.00(c)    2.24(d)
(a) (CU4,000,000) ÷ 2,000,000 = (CU2.00)
(b) (CU4,000,000) ÷ 4,020,000 = (CU0.99)
(c) CU6,000,000 ÷ 2,000,000 = CU3.00
(d) (CU6,000,000 + CU3,000,000) ÷ 4,020,000 = CU2.24

Example 10  Instruments of a subsidiary: calculation of basic and diluted earnings per share[4]
Reference: AASB 133, paragraphs 40, A11 and A12

Parent:
Profit attributable to ordinary equity holders of the parent entity                CU12,000 (excluding any earnings of, or dividends paid by, the subsidiary)
Ordinary shares outstanding                                                        10,000
Instruments of subsidiary owned by the parent                                      800 ordinary shares
30 warrants exercisable to purchase ordinary shares of subsidiary
300 convertible preference shares
Subsidiary:
Profit                                                                             CU5,400
Ordinary shares outstanding                                                        1,000
Warrants                                                                           150, exercisable to purchase ordinary shares of the subsidiary
Exercise price                                                                     CU10
Average market price of one ordinary share                                         CU20
Convertible preference shares                                                      400, each convertible into one ordinary share
Dividends on preference shares                                                     CU1 per share
No inter-company eliminations or adjustments were necessary except for dividends.
For the purposes of this illustration, income taxes have been ignored.

Subsidiary's earnings per share

Basic EPS                                                                                                                                                                           CU5.00 calculated:  CU5,400(a) – CU400(b)
1,000(c)

Diluted EPS                                                                                                                                                                         CU3.66 calculated:  CU5,400(d)
(1,000 + 75(e) + 400(f))
    (a) Subsidiary's profit attributable to ordinary equity holders.
    (b) Dividends paid by subsidiary on convertible preference shares.
    (c) Subsidiary's ordinary shares outstanding.
    (d) Subsidiary's profit attributable to ordinary equity holders (CU5,000) increased by CU400 preference dividends for the purpose of calculating diluted earnings per share.
    (e) Incremental shares from warrants, calculated: [(CU20 – CU10) ÷ CU20] × 150.
    (f) Subsidiary's ordinary shares assumed outstanding from conversion of convertible preference shares, calculated: 400 convertible preference shares × conversion factor of 1.

Consolidated earnings per share

Basic EPS                                                                                                                                                                                   CU1.63 calculated:  CU12,000(a) + CU4,300(b)
10,000(c)

Diluted EPS                                                                                                                                                                                 CU1.61 calculated:  CU12,000 + CU2,928(d) + CU55(e) + CU1,098(f)
10,000
    (a) Parent's profit attributable to ordinary equity holders of the parent entity
    (b) Portion of subsidiary's profit to be included in consolidated basic earnings per share, calculated: (800 × CU5.00) + (300 × CU1.00).
    (c) Parent's ordinary shares outstanding.
    (d) Parent's proportionate interest in subsidiary's earnings attributable to ordinary shares, calculated: (800 ÷ 1,000) × (1,000 shares × CU3.66 per share).
    (e) Parent's proportionate interest