3. To specify the financial reporting by an entity when it undertakes a
share-based payment transaction.
Objectives
Share Based Arrangements
Cash & other Assets Equity instruments
Cash settled Equity settled
Based on the
Price/value of equity Instrument
Including
Share / Share option
Vesting condition met ?
4. Scope
The standard recognizes and addresses three types of transactions according to the method of
settlement.
Equity-settled share-based payment transaction: The entity receives or services in exchange for
equity instruments of the entity (goods including shares or share options).
Cash-settled share-based payment transaction: The entity receives goods or services in exchange
for amounts of cash that are based on the price (or value) of the entity’s shares or other equity
instruments of the entity.
Transactions with a choice of settlement: The entity receives goods or services and either the entity
or the supplier has a choice as to whether the entity settles the transaction in cash (or other assets) or by
issuing equity instruments.
Transactions with employee and others : In their capacity as a holder of equity instrument of the
entity (for example, where an employee receives additional in rights to all shareholders)
5. Key Definition
• Share-based payment: One in which the entity receives or acquires goods and services for
equity instruments of the entity’s shares or other equity instruments of the entity.
• Grant date: The date at which the entity and other party agree to the share-based payment
arrangement. At this date, the entity agrees to pay cash, other assets or equity instruments
to the other party, provided that specified vesting conditions, if any are met . If the
agreement is subject to shareholder approval, then the approval date becomes the grant
date.
6. Key Definition
Vesting condition: The conditions that must be satisfied for the other
party to become entitled to receive the share-based payment.
Vesting period: The period during which the vesting conditions are to
be satisfied.
Vesting date: The date on which all vesting conditions have been met
and the employee/third party becomes entitles to the share-based
payment.
7. Recognition of share-based payment
Equity Settled Cash Settled With cash alternative
Fair value grant day only
No change in fair value
Fair value each balance sheet
date
Changes in fair value in P&L
until exercise
Equity component
(Measure at grant date only)
Cash component
(Measure at each balance sheet)
Changes if fair value follow
split
