The Board considered a summary of the tentative decisions made in the Earnings per Share project. The staff asked the Board to clarify some of its tentative decisions:
- Paragraph 24 of IAS 33 explains that shares that are issuable solely after the passage of time are not contingently issuable shares, because the passage of time is a certainty. The Board affirmed its tentative decision that the calculation of basic EPS should include only those shares that (a) are currently either exercisable or convertible for little or no cost or (b) can currently participate in profit or loss with ordinary shareholders.
- The Board had tentatively decided to amend the calculation of diluted EPS for options, warrants and their equivalents. The Board clarified that it intended the same proposed amendments to apply to contracts that require the entity to repurchase its own shares, such as written put options and forward purchase contracts.
- As part of its proposed amendments to the calculation of diluted EPS, the Board had tentatively decided that the denominator of diluted EPS should not be adjusted for instruments that are measured at fair value through profit or loss (fair value method). The Board clarified that the fair value method should also apply to share based payment awards that are classified as a liability and measured at the market-based measure required in IFRS 2.
- The two-class method in paragraph A14 of IAS 33 is limited to participating equity instruments and two-class ordinary shares. The Board clarified that it intends to amend the scope of the two-class method to include all participating instruments, regardless of whether they are classified as liabilities or equity.
The Board asked the staff to begin drafting the exposure draft on the proposed amendments to IAS 33.