VI There are two main types of shares: common shares and preferred shares. Each stock brings its own benefits to shareholders. Through today’s article, Pham Consult and you will learn more about preferred stocks and how dividends on preferred stocks are calculated as basic interest per share.
Basic earnings per share provides data related to what issue?
Basic earnings per share are specified in Section 09 Accounting Standard No. 30 Issued and announced according to Decision 100/2005/QD-BTC as follows:
Basic earnings per share
07. Enterprises must calculate basic earnings per share according to profits or losses allocated to shareholders who own common shares of the parent company.
08. Basic earnings per share is calculated by dividing the profit or loss attributable to shareholders owning common shares of the parent company (numerator) by the weighted average number of common shares outstanding. circulated during the period (denominator).
09. Basic earnings per share provides data to evaluate the benefits from the business’s operating results during the reporting period that each common share of the parent company brings.
Accordingly, basic earnings per share provides data to evaluate the benefits from the business’s operating results in the reporting period that each common share of the parent company brings.
What types of dividends are included in preferred stock dividends that are calculated as basic interest per share?
Pursuant to Section 12 Accounting Standard No. 30 Issued and announced according to Decision 100/2005/QD-BTC stipulates as follows:
12. Dividends on preferred stocks are deducted from profit or loss after tax to calculate basic earnings per share, including:
a) Dividends of non-cumulative preferred shares are announced during the reporting period; and
b) Cumulative dividends of preferred stocks arising during the reporting period (including cases that have not been notified). The value of preferred dividends during the period does not include cumulative preferred stock dividends related to previous periods that have been paid or announced during the reporting period.
13. Preferred stocks have low dividends to compensate for businesses selling preferred stocks at discounted prices, or high dividends to compensate investors for buying preferred stocks at an additional price. Discounts or premiums upon initial issuance of incremental interest preferred shares are allocated to retained earnings according to the effective profit method and are treated as preferred dividends when calculating basic earnings per share.
14. Enterprises can buy back preferred shares from owners. The greater of the difference between the fair value of the payment to the holder and the carrying value of the preferred stock is a benefit to the holder of the preferred stock and is a deduction from retained earnings. of business. This difference is deducted from the profit or loss attributable to shareholders who own common shares of the parent company.
Accordingly, dividends on preferred shares are subtracted from profit or loss after tax to calculate basic earnings per share, including:
– Dividends of non-cumulative preferred shares are announced during the reporting period; and
– Dividends of cumulative preferred shares arising during the reporting period (including cases that have not been announced). The value of preferred dividends during the period does not include cumulative preferred stock dividends related to previous periods that have been paid or announced during the reporting period.
How is the number of common shares used to calculate basic earnings per share determined?
According to Section 17 Accounting Standard No. 30 Issued and announced under Decision 100/2005/QD-BTC stipulates as follows:
Number of shares to calculate basic earnings per share
17. The number of common shares used to calculate basic earnings per share is the weighted average number of common shares outstanding during the period.
18. The use of the weighted average number of common shares outstanding during the period is due to changes in shareholder equity during the period as the number of common shares outstanding increases or decreases. The weighted average number of common shares outstanding during the period is the number of common shares outstanding at the beginning of the period adjusted by the number of common shares repurchased or issued multiplied by the time factor. The time factor is the ratio of the number of days the shares are outstanding in a period divided by the total number of days in the period.
19. Ordinary shares are included in the weighted average number of shares from the date on which payment for such shares can be received (usually the issuance date). For example:
a) Ordinary shares issued for cash are included in the weighted average number of shares when cash is recorded;
b) Common shares issued instead of paying dividends on common shares or dividends on preferred shares are included in the weighted average number of shares when dividends are converted into shares;
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Thus, the number of common shares used to calculate basic earnings per share is the weighted average number of common shares outstanding during the period. Hope the above information will help your work.
