Presented by:- Jaydeep Joshi

Date :- 07/04/2018

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 IFRS2 Share-based Payment requires an
entity to recognise share-based
payment transactions (such as
granted shares, share options, or share
appreciation rights) in its financial
statements, including transactions with
employees or other parties to be settled in
cash, other assets, or equity instruments of
the entity.

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 IFRS 2 applies to all types of share based
payment transaction. There are two main
types
 In an equity settled transaction the entity
rewards staff with equity instruments
 In cash settled transactions the entity
rewards the staff with amounts of cash. Cash
settled transactions are also known as share
appreciation rights (SAR).

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 When an entity receives employee services or goods
as a result of a share based payment transaction, it
either recognises it as an expense or an asset.
 If the goods or services are received in exchange for
equity the entity recognises as an increase in equity.
 The journal entry is as follows
Dr Expense/Asset
Cr Equity
 If the goods or services are received or acquired in a
cash settled transaction then entity recognises a
liability
 The journal entry is as follows
Dr Expense
Cr Liability

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Non-Employees Employees

IFRS 2 measures the amount In case of transaction with employees,

of transaction at fair value of FV of goods & services cannot be
the goods or services measured reliably. Therefore Entity
received. should measure their value by:
- Fair value of liability is -FV of the equity instrument granted
measured at the end of each -Entity should measure the services
reporting date until they are received from the employees at the
settled. grant date.

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Basic principle

•the entity measures the goods or services acquired & liability incurred at FV ofliability

Until the liability is settled

•entity re‐measures the FV of liability at each reporting date and then at the date of
settlement

Where services arereceived

•these are recognised over the period that employees render the services

The expense recognised in each accounting period

• – Dr Income statement – Cr Liability/ provision

On the vesting date,

•the amount of the provision/liability = cash to be paid

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Employee stock option expenses account …Dr
To Employee stock options outstanding account
(With proportionate of the services received, being recognized as
an expense)

Bank account …..Dr

Employee stock option outstanding account..Dr
To Equity Share CapitalAccount
To Securities Premium account
(Being accounting for options exercised)
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Employee stock options outstanding account …Dr
To employee compensation expenses account
(Being options lapsed – entry reversed)

Profit and loss account….Dr

To Employee compensation expenses account
(Being net expense transferred to profit and loss account)

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