IFRS 2 Share-based Payment

Variable number of equity instruments or variable exercise price or IFRS 2 Shares to the value of a fixed amount Shares to the value of of if a variable number of equity instruments to the value of a fixed amount is granted, commonly known as ‘shares to the value of’, then such an arrangement is … Read more

Topics hide Accounting for group share-based payment transactions Consequences of different classification in different financial statements Accounting by receiving entity with no obligation to settle Accounting by direct parent that settles Equity-settled transactions Case – Illustration of parent and subsidiary accounting Cash-settled transactions Accounting by ultimate parent that settles Case – Ultimate parent settling transaction … Read more

Topics hide Group share-based payments Overview Introduction Definition and scope Group share-based payment transactions settled by group entity Case – Parent grants its own shares to employees of its subsidiaries Case – Parent grants a cash payment based on its own shares to employees of its subsidiaries Case – Intermediate holding company grants ultimate parent’s … Read more

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