International Financial Reporting Standards_guide.pdf

310 Chapter 29 Share-Based Payment (IFRS 2)
29.3.2 In an equity-settled share-based payment transaction, the entity receives goods or
services as consideration for equity instruments (including shares or share options) of the
entity, its parent, or another entity within the consolidated group. An equity instrument is a
contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.
29.3.3 In a cash-settled share-based payment transaction, the entity acquires goods or
services by incurring a liability to transfer cash or other assets to the supplier of those goods
or services for amounts that are based on the price or value of the entity’s shares or other
equity instruments.
29.3.4 The grant date is the date at which the entity and another party (including an
employee) agree to a share-based payment arrangement. At grant date, the entity confers on
the counterparty the right to cash, other assets, or the entity’s equity instruments, provided
that the specified vesting conditions are met. If the transaction is subject to an approval process
(for example by shareholders or the board), the grant date is the date that the necessary
approval is obtained.
29.3.5 Employees and others providing similar services are individuals who render personal
or similar services to the entity.
29.3.6 Under a share-based payment arrangement, a counterparty’s right to receive the
entity’s cash, other assets, or equity instruments vests upon satisfaction of any specified vesting
conditions. Vesting conditions include service conditions. The vesting period is the
period during which all the specified vesting conditions of a share-based payment arrangement
should be satisfied.
29.3.7 Fair value is the amount for which an asset could be exchanged, a liability settled, or
an equity instrument granted between knowledgeable, willing parties in an arm’s-length
transaction.
29.3.8 Intrinsic value is the difference between the fair value of the shares to which the
counterparty has the right to subscribe or which it has the right to receive, and the price the
counterparty is required to pay for those shares.
29.3.9 Market condition is a condition that is related to the market price of the entity’s
equity instruments.
29.3.10 A share option is a contract that gives the holder the right but not the obligation to
subscribe to the entity’s shares at a fixed or determinable price for a specified period of time.
29.4 ACCOUNTING TREATMENT
29.4.1 Share-based payments could be:
■ cash settled, that is, by a cash payment based on the value of equity instruments;
■ equity settled, that is, by the issue of equity instruments; or
■ cash or equity settled (at the option of the entity or supplier).
Recognition
29.4.2 An entity should recognize the goods or services received or acquired in a sharebased
payment transaction when it obtains the goods or as the services are received.