ASBJ 02
Accounting Standard for Earnings Per Share
Accounting Standard for Earnings Per Share is part of the Japan GAAP framework.
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Conceptual Framework Linkage
A single, comparable per-share profitability metric
EARNINGS PER SHARE (1株当たり当期純利益, EPS) distills a company's overall profitability down to a SINGLE, PER-SHARE figure, allowing INVESTORS to compare profitability across companies of DIFFERENT sizes and across TIME, independent of share count changes. ASBJ Statement No. 2 sets out how to calculate BOTH a "BASIC" EPS figure and, where potentially dilutive securities exist, a "DILUTED" EPS figure reflecting the FULL potential dilution of existing shareholders' claims.
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Scope
Companies with publicly traded (or otherwise widely held) shares
This Statement applies to companies REQUIRED (or electing) to disclose EPS figures – typically listed companies, though the calculation methodology is relevant WHEREVER EPS disclosure is presented.
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Basic Earnings Per Share (基本的1株当たり当期純利益)
Profit attributable to owners of parent, divided by weighted average shares
BASIC EPS is calculated as PROFIT ATTRIBUTABLE TO OWNERS OF PARENT (Section 4) for the period, DIVIDED by the WEIGHTED AVERAGE number of shares of Common Stock OUTSTANDING during the period (Section 5) – the foundational, undiluted per-share profitability measure.
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Profit Attributable to Owners of Parent (親会社株主に帰属する当期純利益)
Consolidated profit, excluding the portion belonging to non-controlling interests
For CONSOLIDATED financial statements, the numerator used is PROFIT ATTRIBUTABLE TO OWNERS OF PARENT – CONSOLIDATED net profit for the period, AFTER excluding the portion attributable to NON-CONTROLLING INTERESTS (非支配株主持分) – ensuring EPS reflects only the earnings genuinely available to the PARENT company's own shareholders.
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Weighted Average Shares – the Treasury Share Exclusion
Treasury shares held during the period are excluded from the denominator
The WEIGHTED AVERAGE share count EXCLUDES any TREASURY SHARES (自己株式, see the companion ASBJ Statement No. 1 poster) held by the company DURING the period – since treasury shares do NOT represent an outstanding claim of an EXTERNAL shareholder, they are NOT counted in the EPS denominator for the period they are held.
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Diluted Earnings Per Share (潜在株式調整後1株当たり当期純利益)
Reflecting the maximum potential dilution from convertible or option-like instruments
Where a company has issued instruments with the POTENTIAL to convert into, or be exercised for, additional Common Stock – STOCK ACQUISITION RIGHTS (新株予約権, broadly equivalent to stock options/warrants), convertible bonds, or similar – DILUTED EPS incorporates the ADDITIONAL shares that WOULD result if those instruments were CONVERTED/EXERCISED, adjusting BOTH the numerator (for any related profit effect, e.g. interest expense saved on converted bonds) and the denominator (for the additional potential shares) – PROVIDED the effect is genuinely DILUTIVE (reduces EPS).
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Worked Example – Basic EPS
Excluding treasury shares from the denominator
Example: A company with treasury shares held throughout the year
A company reports profit attributable to owners of parent of ¥900,000,000 for the year. It has 10,000,000 shares of Common Stock issued, of which 500,000 are held as treasury shares throughout the entire year.
Weighted average shares OUTSTANDING = 10,000,000 − 500,000 = 9,500,000 shares. Basic EPS = ¥900,000,000 ÷ 9,500,000 = ¥94.7 per share (approximately) – the treasury shares are EXCLUDED from the denominator for the entire period they were held.
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Worked Example – Diluted EPS With Stock Acquisition Rights
Incorporating potential additional shares
Example: Outstanding stock acquisition rights
Continuing the prior example (Basic EPS ¥94.7, 9,500,000 weighted average shares), the company has outstanding stock acquisition rights that, if exercised, would result in 300,000 ADDITIONAL shares being issued, with no offsetting profit adjustment required.
Diluted weighted average shares = 9,500,000 + 300,000 = 9,800,000 shares. Diluted EPS = ¥900,000,000 ÷ 9,800,000 = ¥91.8 per share (approximately) – LOWER than basic EPS, reflecting the DILUTIVE effect of the potential additional shares from the stock acquisition rights.
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Disclosure Requirements
What ASBJ Statement No. 2 requires
Basic and diluted EPS, presented on the face of the Statement of IncomeThe basis of calculation, including the numerator and weighted average share count usedNature of potentially dilutive securities and why they were (or were not) included in the diluted calculation
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Whether a potentially dilutive instrument is genuinely dilutive (reduces EPS) and should be included in the diluted calculation
SIGNIFICANT ESTIMATES
Weighted average calculation for shares issued or reacquired partway through the period
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Relationship to IAS/IFRS
Comparison – J-GAAP vs IAS 33
FeatureJ-GAAP (ASBJ Statement No. 2)IFRS (IAS 33)
Basic EPS formulaProfit attributable to owners of parent ÷ weighted average sharesSame formula – converged
Treasury share exclusionExcluded from the denominatorExcluded from the denominator – converged
Diluted EPS mechanicsAdjusts for potentially dilutive instruments, if-converted/treasury-stock-style methodsSame general approach – converged
EPS is one of the MOST genuinely converged areas between J-GAAP and IFRS, reflecting ASBJ's long-standing convergence project with the IASB – the core mechanics travel almost directly between the two frameworks.
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Statement Mapping
Where every EPS event lands
EventStatement(s) affectedNotes
Basic/Diluted EPS disclosureP&LPresented on the face of the Statement of Income
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Related Standards
Cross-reference map
StandardConnection
ASBJ Statement No. 1Supplies the treasury share concept excluded from the EPS weighted average denominator
ASBJ Statement No. 22Consolidated Financial Statements – supplies the non-controlling interests concept used to determine profit attributable to owners of parent
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Quick-Reference Glossary
Profit attributable to owners of parent (親会社株主に帰属する当期純利益)
Consolidated profit for the period, excluding the portion attributable to non-controlling interests.
Stock acquisition rights (新株予約権)
Rights entitling the holder to acquire shares of the company, a common source of potential dilution for diluted EPS purposes.
Weighted average shares outstanding
The time-weighted average number of shares outstanding during a period, excluding treasury shares held.
Financial statement key (Japan GAAP terminology)
BS Balance Sheet (貸借対照表) P&L Statement of Income / Profit and Loss Statement (損益計算書) Net Assets 純資産の部 SCNA Statement of Changes in Net Assets (株主資本等変動計算書) SCF Statement of Cash Flows (キャッシュ・フロー計算書)