Document ID: chunk:federal_register_of_legislation:F2021C00879:body:0:p26
Version: federal_register_of_legislation:F2021C00879
Segment Type: other
Provision Reference: 
Character Range: 70060–77717

restated for rights issue:                                                                                                                                                            CU1,100
                                                                                 (500 shares × 1.1)                                                                                                  CU2.00
20X1 basic EPS including effects of rights issue:                                                                                                                                                    CU1,500
                                                                                 (500 × 1.1 × 2/12) + (600 × 10/12)                                                                                                        CU2.54
20X2 basic EPS:                                                                                                                                                                                      CU1,800 ÷ 600 shares                               CU3.00

Example 5  Effects of share options on diluted earnings per share
Reference: AASB 133, paragraphs 45–47

Profit attributable to ordinary equity holders of the parent entity for year 20X1                                                                                                                                  CU1,200,000
Weighted average number of ordinary shares outstanding during year 20X1                                                                                                                                            500,000 shares
Average market price of one ordinary share during year 20X1                                                                                                                                                        CU20.00
Weighted average number of shares under option during year 20X1                                                                                                                                                    100,000 shares
Exercise price for shares under option during year 20X1                                                                                                                                                            CU15.00
Calculation of earnings per share
                                                                                                                                                                                                                   Earnings        Shares    Per share
Profit attributable to ordinary equity holders of the parent entity for year 20X1                                                                                                                                  CU1,200,000
Weighted average shares outstanding during year 20X1                                                                                                                                                                               500,000
Basic earnings per share                                                                                                                                                                                                                     CU2.40
Weighted average number of shares under option                                                                                                                                                                                     100,000
Weighted average number of shares that would have been issued at average market price: (100,000 × CU15.00) ÷ CU20.00                                                                                               (a)             (75,000)
Diluted earnings per share                                                                                                                                                                                         CU1,200,000     525,000   CU2.29
    (a) Earnings have not increased because the total number of shares has increased only by the number of shares (25,000) deemed to have been issued for no consideration (see paragraph 46(b) of the Standard).

Example 5A  Determining the exercise price of employee share options

Weighted average number of unvested share options per employee                                                                                                                                                                        1,000
Weighted average amount per employee to be recognised over the remainder of the vesting period for employee services to be rendered as consideration for the share options, determined in accordance with AASB 2 Share-based Payment  CU1,200
Cash exercise price of unvested share options                                                                                                                                                                                         CU15

Calculation of adjusted exercise price
Fair value of services yet to be rendered per employee:                                                                                                                                                                               CU1,200
Fair value of services yet to be rendered per option: (CU1,200 ÷ 1,000)                                                                                                                                                               CU1.20
Total exercise price of share options: (CU15.00 + CU1.20)                                                                                                                                                                             CU16.20

Example 6  Convertible bonds[2]
Reference: AASB 133, paragraphs 33, 34, 36 and 49

Profit attributable to ordinary equity holders of the parent entity                                                                                                             CU1,004
Ordinary shares outstanding                                                                                                                                                     1,000
Basic earnings per share                                                                                                                                                        CU1.00
Convertible bonds                                                                                                                                                               100
Each block of 10 bonds is convertible into three ordinary shares
Interest expense for the current year relating to the liability component of the convertible bonds                                                                              CU10
Current and deferred tax relating to that interest expense                                                                                                                      CU4

Note: the interest expense includes amortisation of the discount arising on initial recognition of the liability component (see AASB 132 Financial Instruments: Presentation).

Adjusted profit attributable to ordinary equity holders
of the parent entity                                                                                                                                                            CU1,004 + CU10 – CU4
= CU1,010
Number of ordinary shares resulting from conversion of bonds                                                                                                                                             30
Number of ordinary shares