Earnings per share standard is finalized.

The International Accounting Standards Committee issued International Accounting Standard (IAS) no. 33, Earnings Per Share. The IASC worked closely with the Financial Accounting Standards Board in drafting the standard, which is very similar to the recently released FASB Statement no. 128, Earnings per Share.

EPS is widely used in capital markets as a first guide to company performance. The new IAS requires companies to disclose

* A basic EPS number obtained by dividing net profit or loss attributable to ordinary shareholders by the number of ordinary shares.

* A diluted EPS number used to warn investors of reductions in the value of EPS.

The main difference between the two standards is that FASB Statement no. 128 requires more disclosure than IAS no. 33. The FASB requires the disclosure of per-share amounts for income from continuing operations on the face of the income statements and for extraordinary items, accounting changes and discontinued operations. The IASC requires only net profit per-share amounts on the face of the income statements and encourages other disclosures.

"We are very pleased to have come up with a pair of statements essentially in tune with each other," said Douglas Brooking, chairman of the IASC EPS steering committee. "It was a break-through experience to work as closely as we did with the FASB."

Brooking said the IASC would now pursue standardizing the method companies use to determine earnings. "There still is a major debate around the world on how to determine the numerator, or the earnings figure of the EPS calculation. I am hopeful we will agree on a common definition within the next few years."

IAS no. 33 will be effective for financial statements covering periods beginning on or after January 1, 1988, with earlier application encouraged. Copies are available for $24 by writing the IASC at 167 Fleet Street, London EC4A 2ES, England, or calling 011-44-171-353-0565, by fax at 011-44-171-353-0562 or by e-mail at iasc@ netcomuk.co.uk.

Clarifications

The following items clarify two articles in the March 1997 issue of the Journal:

* Some readers have asked how the cost of goods sold figure was determined in exhibit 3 of"The Tax Benefits of ABC" (page 36). As noted on page 35, Hi-V has a 10% beginning inventory. Thus, the year 1 ABC cost of goods sold amount has two components: (1) the portion of sales that comes from the beginning inventory valued at the plantwide cost--1,200 units of Hi-V at $88--and (2) the portion of sales that comes from the current year's production valued at the ABC unit costs--10,800 units of Hi-V @ $69.49 and 6,000 units of Lo-V @ $69.01. See the computation below:

ABC Cost of Goods Sold Computation--Year 1

From beginning inventory (@ plantwide rates):

Hi-V: (10% X 12,000) X $88         $105,600
Lo-V: 0 X $32                      _______       $ 105,600
From production (@ ABC rates):
Hi-V: (90% X 12,000) X $69.49       750,492
Lo-V: @ 6,000 X $69.01              414,060       1,164,552
Cost of goods sold                 --------      $1,270,152

* The Web address for the Accounting News Network given in "Where to Find Help Online" (page 45) is now http://www.microsoft.com/smallbiz. In addition, the Electronic Accountant Newswire, identified as its own Web site (on page 48), is but a small part of the Electronic Accountant Web site. The latter, which has many features besides Newswire (for example, Web Links, Buyers Guide and discussion groups), can be reached directly at http://www.electronicaccountant.com.