AS 20 (Earnings per Share) is the accounting standard notified by the Institute of Chartered Accountants of India (ICAI) that prescribes how companies must compute and present earnings per share (EPS) in their financial statements.

The Ministry of Corporate Affairs (MCA) notified AS 20 under the Companies (Accounting Standards) Rules, 2006, reaffirmed in the Companies (Accounting Standards) Rules, 2021. The standard became effective from 1 April 2001 for Level I enterprises and superseded the earlier ICAI Accounting Standard issued in April 2001.

For FY 2026-27, mid-market listed companies applying the AS framework must comply with both AS 20 and SEBI’s EPS disclosure requirements. Quarterly EPS in interim filings must align with the AS 20 approach to avoid inconsistencies.

AS 20 at a Glance

AS 20 sets out the principles for calculating and presenting earnings per share (EPS), ensuring comparability across periods and among peer companies. The standard primarily applies to Level I enterprises, including all listed Indian companies.

What is AS 20: Earnings per Share?

AS 20 is an Indian accounting standard that requires entities to compute and disclose earnings per share for each period presented in their statement of profit and loss. The core principle is to provide a consistent basis for measuring how much profit or loss is attributable to each equity share.

ICAI introduced this standard to improve comparability between different companies and reporting periods. The approach closely aligns with international benchmarks such as Ind AS 33 and IAS 33, reflecting India's convergence with global financial reporting practices.

Chartered accountants, statutory auditors, CFOs of listed companies, and finance teams preparing financial statements use this standard regularly.

Objective of AS 20

• Prescribe principles for determination and presentation of earnings per share to improve comparison between enterprises in the same period and between different periods of the same enterprise.
• Specify computation of basic and diluted EPS in accordance with the standard's approach.
• Establish disclosure requirements relating to EPS.

These objectives reinforce the true and fair view requirement under Section 129 of the Companies Act, 2013. Accurate EPS computation supports transparent financial reporting that enables informed decisions by investors and regulators.

Who Must Apply AS 20?

Entities covered

AS 20 applies mandatorily to Level I enterprises preparing standalone financial statements. Presentation of EPS is also required on consolidated financial statements where applicable by law or SEBI regulations.

Listed companies must present both basic and diluted EPS on the face of their profit and loss statement as required by Schedule III to the Companies Act, 2013.

Scope exclusions

Entities not mandatorily covered:

• Level II and III enterprises (voluntary application only).

Exclusions from scope:

• Components other than profit or loss.

When the standard does not apply

For entities applying Ind AS 33 or IFRS/IAS 33 due to regulatory mandate or voluntary adoption, those standards override AS 20. Items outside profit or loss, such as items recognised directly in equity, are not subject to EPS calculation under this standard.

Key Definitions under AS 20

Recognition and Measurement under AS 20

When to recognise

An entity must calculate and present basic and diluted earnings per share for every period presented in its statement of profit and loss. This requirement applies whether preparing annual or interim financial statements if mandated by SEBI or other regulators. Listed entities must also present EPS figures in quarterly results submitted under SEBI guidelines.

Bonus issues, share splits, or consolidations trigger retrospective adjustment, EPS must be recalculated as if these events occurred at the start of every period presented.

Initial measurement

Basic EPS is computed using two primary components:

Basic EPS = (Net profit/loss attributable to equity shareholders) / (Weighted average number of equity shares outstanding during the period)

The numerator is net profit or loss after deducting preference dividends (including any attributable tax). If preference dividends are cumulative but unpaid during a period, they are still deducted whether declared or not.

The denominator is determined by time-weighting each change in equity shares throughout the reporting period, shares issued or bought back are included proportionately based on when they occurred within the year.

For example:

If a company had three crore shares at year start but issued one crore new shares halfway through the year at market value, weighted average shares would be calculated based on months outstanding before/after issue date.

Subsequent measurement

Diluted EPS incorporates all dilutive potential equity shares outstanding during the period:

Diluted EPS = (Adjusted net profit/loss attributable to equity shareholders) / (Adjusted weighted average number of equity shares including dilutive potential equity shares)

Potential equity shares include convertible debentures/preference shares, employee stock options/plans (ESOPs), warrants etc., that could convert into ordinary shares if exercised/conversion criteria are met within reporting period.

Adjustments:

Numerator increases by interest saved on convertible debt or dividend saved on convertible preference shares, net of tax.

Denominator increases by additional potential ordinary shares assuming all dilutive instruments exercised/conversion occurred at start of period.

Anti-dilutive instruments are excluded individually; only those reducing EPS are included.

Treasury stock method applies for options/warrants, assume exercise proceeds used to buy back maximum possible number of ordinary shares at average market price during period; only net increase counted as dilution.

If-converted method applies for convertibles, assume full conversion at start of period unless anti-dilutive.

For bonus issues/share splits/consolidations occurring after reporting date but before approval/issuance of financials, adjust all periods presented retrospectively as if event occurred at beginning of earliest period shown.

AS 20 Computational Approach

AS 20’s computational methodology mirrors Ind AS 33:

Basic EPS measures earnings available to each existing ordinary share over time-weighted average number outstanding during reporting period.

Diluted EPS adjusts both numerator/denominator for effect of all potentially dilutive instruments, using treasury stock method for options/warrants; if-converted method for convertibles; anti-dilution tested separately for each class/instrument type before inclusion in denominator.

Schedule III mandates disclosure on face of statement regardless of whether entity falls within mandatory scope under Companies Act rules, a key compliance point observed frequently in audit practice across listed Indian companies.

Worked Examples on AS 20

Example 1: Basic EPS with rights issue at fair value

Maharashtra Cement Ltd had three crore equity shares outstanding from April-September FY 2025-26. On October 1 2025 it issued one crore new equity shares at full market value via rights issue. Net profit after tax was Rs 18 crore; preference dividend paid was Rs 2 crore.

Computation Table

Journal Entry:

No accounting entry required, EPS presentation only; reconciliation note discloses weighted average calculation basis as part of notes to accounts.

Example 2: Diluted EPS with employee stock options

Sundaram Engineering Pvt Ltd had two crore equity shares throughout FY 2025-26 plus an ESOP plan granting twenty-five lakh options exercisable at Rs 100/share when average market price was Rs 150/share; net profit after tax was Rs 12 crore with no preference dividend payable.

Computation Table

Journal Entry:

No accounting entry arises from this computation, EPS remains a disclosure item only; ESOP accounting follows ICAI Guidance Note on Employee Share-based Payments separately from this calculation.

Disclosure Requirements under AS 20

AS 20 mandates detailed disclosure of earnings per share (EPS) to ensure transparent and comparable reporting. Schedule III to the Companies Act, 2013, requires companies to present both basic and diluted EPS on the face of the statement of profit and loss. Proper disclosure is essential for users to understand the computation and reconcile reported figures.

Auditors must verify these disclosures under SA 700 to ensure compliance with both AS 20 and Schedule III.

Common Mistakes & Industry-Specific Considerations

Common errors auditors flag

• Using period-end share count instead of weighted average for basic EPS
• Failing to retrospectively adjust EPS for bonus issues and share splits
• Including antidilutive ESOPs or convertibles in diluted EPS
• Failing to deduct preference dividends from numerator (cumulative preference dividends must be deducted whether declared or not)
• Misapplying treasury stock method to out-of-the-money options
• Inadequate disclosure of EPS computation reconciliation

Industry application notes

Mid-market listed companies applying the AS framework must comply with both AS 20 and SEBI requirements. Quarterly EPS in interim filings must follow the AS 20 methodology for consistency across periods.

Companies with ESOPs or stock appreciation rights (SARs) often encounter dilution in EPS. The standard’s approach aligns with ICAI’s Guidance Note on Employee Share-based Payments, ensuring that both vesting and non-vesting components are correctly factored into diluted EPS.

Indian companies issuing optionally or compulsorily convertible debentures (OCDs/CCDs) must assess classification under future standards like AS 31. Until then, most practitioners align treatment pragmatically with AS 20’s requirements for potential equity shares.

AS 20 vs Ind AS 33 vs IFRS: Key Differences

The table below compares key aspects of earnings per share accounting under AS 20, Ind AS 33, and IFRS (IAS 33):

India’s carve-outs mainly relate to scope: under Indian GAAP (AS), only Level I enterprises are mandatorily covered, while Ind AS extends mandatory applicability to all listed companies. The computational methodology remains aligned internationally, supporting comparability for Indian issuers accessing global capital markets.

Latest Amendments to AS 20 (FY 2026-27)

No amendments have been notified to AS 20 for FY 2026-27 as of 2026-05-02. The standard continues to apply in its existing form.

Related Standards You Should Know

• [Ind AS 33](/ind-as-33-earnings-per-share/), Equivalent EPS standard for Ind AS-applicable companies; substantively similar.
• [AS 25](/as-25-interim-financial-reporting/), Interim financial reporting includes EPS where AS 20 applies.
• [AS 24](/as-24-discontinuing-operations/), Discontinued operations EPS presentation.
• [AS 1](/as-1-disclosure-of-accounting-policies/), Disclosure of accounting policy for EPS computation.

Need Help with AS 20 Compliance?

Patron Accounting LLP supports listed companies, NBFCs, and mid-market enterprises with end-to-end compliance on earnings per share (EPS) reporting under AS 20. Our team blends technical expertise with practical audit experience across industries.

Our services include:

• Statutory Audit
• Financial Reporting & Schedule III
• Disclosure Review
• Ind AS Advisory

Schedule a 30-minute consultation with our Ind AS team, Pune · Mumbai · Delhi · Gurugram.

About This Article

Reviewed by CA & CS Team · Patron Accounting LLP

Technical reviewer: CA Sundram Gupta, FCA

Last reviewed: 2026-05-02

Sources: ICAI Compendium of Accounting Standards · MCA Notification (Companies (Accounting Standards) Rules, 2006 (reaffirmed in Companies (Accounting Standards) Rules, 2021)) · IFRS Foundation