Accounting Standard (AS) 20, ‘Earnings Per Share’ is mandatory in nature, in respect of enterprises whose equity shares or potential equity shares are listed on a recognised stock exchange in India.

An entity which has neither equity shares nor potential equity shares which are listed nee not calculate and disclose earnings per share.

But, if that enterprise discloses earnings per share for complying with the requirements of any statute or otherwise, it should calculate and disclose earnings per share in accordance with AS 20.

Part IV of the Schedule VI to the Companies Act, 1956, requires, among other things, disclosure of earnings per share.

Accordingly, it has been clarified that every company, which is required to give information under Part IV of the Schedule VI to the Companies Act, 1956, should calculate and disclose earnings per share in accordance with AS 20, whether its equity shares or potential equity shares are listed on a recognised stock exchange in India or not.