FASB attempts US convergence with international EPS calculation

The Financial Accounting Standards Board is seeking views on whether it has
achieved it’s goal of simplifying an accounting rule which sets out how to
calculate earnings per share (EPS), so that differences between the US and
international standard are eliminated.

The US standard setter, which issued a revised exposure draft of Statement
128 yesterday, proposed the changes to the standard with the intention of
simplifying the calculation and converging the calculation of EPS with the
International Accounting Standards Board’s EPS rule, called IAS 33.

The statements are intended to improve the comparability of EPS because the
denominator used to calculate EPS under Statement 128 would be the same as that
used to calculate EPS under IAS 33, with limited exceptions. Those limited
exceptions relate to certain instruments for which the underlying accounting
under US generally accepted accounting principles (GAAP) and international
financial reporting standards (IFRS) is different.

FASB practice fellow Sheri Wyatt said that in addition to improving financial
reporting, the proposed amendment to Statement 128 is an important step in the
international convergence process

‘By eliminating the differences between Statement 128 and IAS 33, the
proposed amendment will enhance the comparability of EPS reported under U.S.
GAAP and IFRS,’ said Wyatt.

Comment submission must be made in writing by December 5, 2008 by email to, File Reference No. 1240-001.

Further reading:

Read the
exposure draft of Statement 128

Related reading

Fiona Westwood of Smith and Williamson.