In accordance with the "Basic Standards of Enterprise Accounting," the Ministry of Finance issued Accounting Standard for Business Enterprises No. 34 — Earnings Per Share on 2006/2/15, effective as of 2007/1/1.
1. Overview of Guidelines
This standard applies to enterprises whose ordinary shares or potential ordinary shares are publicly traded, as well as those in the process of issuing ordinary shares or potential ordinary shares publicly. Earnings per share shall be calculated and presented based on consolidated financial statements.
Potential common stock
Potential common stock refers to a financial instrument or other contract that grants the holder the right to obtain ordinary shares during the reporting period or in future periods. Examples include convertible bonds, warrants, and share options.
II. Basic Earnings Per Share
Basic earnings per share shall be calculated by dividing the current period net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding.
Calculation Formula
Weighted average number of ordinary shares outstanding = Ordinary shares outstanding at beginning of period + New ordinary shares issued during the period × (Period of issuance ÷ Reporting period) – Ordinary shares repurchased during the period × (Period of repurchase ÷ Reporting period)
III. Diluted Earnings Per Share
If a company has dilutive potential ordinary shares, it shall adjust the net profit attributable to common shareholders and the weighted average number of ordinary shares outstanding for the period accordingly, and use these adjusted figures to calculate diluted earnings per share.
Adjustments
- • Interest on dilutive potential ordinary shares recognized as expense in the current period
- • Gain or loss arising from the conversion of dilutive potential ordinary shares
- • The above adjustments should consider the related income tax effects.
IV. Presentation and Disclosure
- • Enterprises shall separately present basic and diluted earnings per share in the statement of profit or loss.
- • Companies shall disclose in the notes the calculation process for the numerator and denominator of basic and diluted earnings per share.
- • Potential ordinary shares that were not dilutive in the reporting period but are likely to be dilutive in future periods
Regulatory Document Attachment
Accounting Standards for Business Enterprises No. 34 — Earnings per Share (PDF)