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

IFRS FOR SMES – JULY 2009average share price. The entity should derive an estimate of expectedvolatility consistent with the valuation methodology used to determine thefair value of the shares.Modifications to the terms and conditions on which equityinstruments were granted26.12 If an entity modifies the vesting conditions in a manner that is beneficial to theemployee, for example, by reducing the exercise price of an option or reducingthe vesting period or by modifying or eliminating a performance condition, theentity shall take the modified vesting conditions into account in accounting forthe share-based payment transaction, as follows:(a)(b)If the modification increases the fair value of the equity instrumentsgranted (or increases the number of equity instruments granted) measuredimmediately before and after the modification, the entity shall include theincremental fair value granted in the measurement of the amountrecognised for services received as consideration for the equity instrumentsgranted. The incremental fair value granted is the difference between thefair value of the modified equity instrument and that of the original equityinstrument, both estimated as at the date of the modification. If themodification occurs during the vesting period, the incremental fair valuegranted is included in the measurement of the amount recognised forservices received over the period from the modification date until the datewhen the modified equity instruments vest, in addition to the amountbased on the grant date fair value of the original equity instruments, whichis recognised over the remainder of the original vesting period.If the modification reduces the total fair value of the share-based paymentarrangement, or apparently is not otherwise beneficial to the employee,the entity shall nevertheless continue to account for the services receivedas consideration for the equity instruments granted as if that modificationhad not occurred.Cancellations and settlements26.13 An entity shall account for a cancellation or settlement of an equity-settledshare-based payment award as an acceleration of vesting, and therefore shallrecognise immediately the amount that otherwise would have been recognisedfor services received over the remainder of the vesting period.Cash-settled share-based payment transactions26.14 For cash-settled share-based payment transactions, an entity shall measure thegoods or services acquired and the liability incurred at the fair value of theliability. Until the liability is settled, the entity shall remeasure the fair value ofthe liability at each reporting date and at the date of settlement, with any changesin fair value recognised in profit or loss for the period.© IASCF 155