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Topics hide Option valuation models Model selection Simple model explanation Model selection Black-Scholes-Merton Lattice Implementing a lattice model Monte Carlo Comparing option valuation models Complex capital structures Option valuation models Option valuation models use mathematical techniques to identify a range of possible future share prices at the exercise date. From these possible future share prices, … Read more

Topics hide Cancellation of employee share-based payments Cancellation by employee Case – Voluntary cancellation by employee Case – Cancellation by employee due to failure to meet non-vesting condition Cancellation by entity Case – Cancellation by employer with compensation payment Case – Cancellation of share-based payment with non-market performance condition Cancellation of employee share-based payments Cancellations … Read more

Topics hide Replacements of employee share-based payments Case – Replacement award with incremental fair value Case – New plan without cancelling old plan Replacements of employee share-based payments Sometimes a share-based payment is granted as a replacement for another share-based payment that is cancelled. In this case, the principles of modification accounting are applied. The … Read more

Topics hide Modifications of employee share-based payment transactions Modifications Modifications that do not change classification of arrangement Increases in fair value of share-based payment Determining whether there is an increase in fair value of share-based payment Increases in number of equity instruments granted Case – Increase in number of equity instruments granted Beneficial modifications of … Read more

Topics hide Determination of grant date Approval and communication by the employer Case – Grant date and communication of a plan to the employees Meaning of ‘shared understanding’ Case – Grant date and determination of exercise price dependent on formula Acceptance by the employee Case – Annual acceptance and monthly reductions Grant date decision tree … Read more

Topics hide Determination of the vesting period Case – Service commencement date before grant date Graded vesting Case – Graded vesting Attribution to periods Case – Straight-line attribution and different reference periods Case – Straight-line attribution with challenging performance target Variable vesting period Market condition with variable vesting period Case – Market condition not met … Read more

Topics hide Employee share purchase plans Case – Share purchase plan at fixed price for longer period Case – Impact of classification as true ESPP or as option plan Share purchases funded through loans Case – Share purchase funded through loan: Net settlement Case – Share purchase funded through loan: Gross settlement Determining assets to … Read more

Topics hide Employee cash-settled share-based payments Overview Basic principles of accounting for cash-settled share-based payment transactions with employees Initial measurement Remeasurements Case – Cash-settled share-based payment transaction with change in value of equity instrument Capitalisation of the services received Case – Cash-settled share-based payment with capitalisation Case – Cash-settled share-based payment with service and market … Read more