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CPA Resources

IASB seeks to simplify EPS formula

LONDON, Aug. 24, 2008 -- The International Accounting Standards Board has published for public comment proposals to simplify the calculation of earnings per share (EPS) and to eliminate differences between the methods required by international financial reporting standards (IFRSs) and U.S. accounting standards to calculate EPS.

The proposals are part of the short-term convergence project that the IASB is conducting jointly with the U.S. Financial Accounting Standards Board. Consequently, the FASB has also published an exposure draft to amend SFAS 128, "Earnings per Share."

In particular, the proposals aim to achieve convergence by:

  • providing a clear principle to determine which instruments should be included in the EPS calculation;
  • clarifying the EPS calculation for particular instruments, such as contracts to sell or repurchase an entity’s own shares and participating instruments; and
  • simplifying the EPS calculation for instruments that are accounted for at fair value through profit or loss.

The IASB believes that the proposals would, if implemented, simplify the calculation of EPS and increase transparency for users of financial statements.

The IASB invites comments on the exposure draft "Simplifying Earnings per Share" (proposed amendments to IAS 33) by Dec. 5, 2008. The exposure draft is available on the "Open for Comment" section on www.iasb.org.

Printed copies (ISBN 978-1-905590-70-4) will be available shortly, at £10 plus shipping, from:

IASC Foundation Publications Department
30 Cannon Street
London EC4M 6XH, United Kingdom.
Telephone: +44 (0)20 7332 2730       
Fax: +44 (0)20 7332 2749

Email: publications@iasb.org

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