(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009Section 26Share-based PaymentScope of this section26.1 This section specifies the accounting for all share-based payment transactionsincluding:(a)(b)(c)equity-settled share-based payment transactions, in which the entityacquires goods or services as consideration for equity instruments of theentity (including shares or share options);cash-settled share-based payment transactions, in which the entity acquiresgoods or services by incurring liabilities to the supplier of those goods orservices for amounts that are based on the price (or value) of the entity’sshares or other equity instruments of the entity; andtransactions in which the entity receives or acquires goods or services andthe terms of the arrangement provide either the entity or the supplier ofthose goods or services with a choice of whether the entity settles thetransaction in cash (or other assets) or by issuing equity instruments.26.2 Cash-settled share-based payment transactions include share appreciation rights.For example, an entity might grant share appreciation rights to employees as partof their remuneration package, whereby the employees will become entitled to afuture cash payment (rather than an equity instrument), based on the increase inthe entity’s share price from a specified level over a specified period of time. Or anentity might grant to its employees a right to receive a future cash payment bygranting to them a right to shares (including shares to be issued upon the exerciseof share options) that are redeemable, either mandatorily (eg upon cessation ofemployment) or at the employee’s option.Recognition26.3 An entity shall recognise the goods or services received or acquired in ashare-based payment transaction when it obtains the goods or as the services arereceived. The entity shall recognise a corresponding increase in equity if thegoods or services were received in an equity-settled share-based paymenttransaction, or a liability if the goods or services were acquired in a cash-settledshare-based payment transaction.26.4 When the goods or services received or acquired in a share-based paymenttransaction do not qualify for recognition as assets, the entity shall recognisethem as expenses.152 © IASCF