PFRS 2: Share-Based Payment

Nature:

 Share-based compensation plan is a compensation arrangement established by the entity

whereby the entity’s employees shall receive shares in exchange for their services or the entity
incurs liabilities to the employees in amounts based on the price of its shares.

Recognition:

 If the share options vest immediately, the employees is not required to complete a specified
period of service before unconditionally entitled to the share options. The entity shall recognize
the compensation as expense in full immediately.
 If the share options do not vest until the employee completes a specified service period, the
compensation is recognized as expense over the service period or vesting period, meaning, from
the date of grant to the date on which the options can first be exercised.

Measurement:

The compensation resulting from share options is measured ff. two methods, namely:

 Fair Value method

o This means that the compensation is equal to the fair value of the share options on the
date of grant.
 Intrinsic Value method
o The compensation is equal to the intrinsic value of the share options. It is the excess of
the market value of the share over the option price.

Transaction:

 Acceleration of Vesting
o If an entity cancels or settles a grant of share options during the vesting period, the
entity shall account for the cancelation or settlement as an acceleration of vesting
o The entity shall recognize immediately the compensation expense that otherwise would
have been recognized for services received over the remainder of the vesting period.
o Any payment made to the employee on the cancelation or settlement of the grant shall
be accounted for as the repurchase of equity interest, meaning, a deduction from
equity.