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Learning Objectives
• Measurement date is the date at which the fair value of the equity
instruments granted is measured for the purposes of PFRS 2.
a. For transactions with non-employees, the measurement date is the date
when the entity receives the good or service.
b. For transactions with employees and others providing similar
services, the measurement date is grant date.
• Grant date is the date at which the entity and the counterparty agree to a
share-based payment arrangement, being when the entity and the counterparty
have a shared understanding of theFramework
Conceptual terms and conditions of the arrangement.
& Acctg.
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Standards (by: Zeus Vernon B. Millan)
• Intrinsic value is the difference between the fair value of the
shares to which the counterparty has the conditional or
unconditional right to subscribe or the right to receive and the
subscription price (if any) that the counterparty is required to
pay for those shares.
• For transactions with employees and others providing similar services, the
entity shall measure the fair value of the compound instrument and its
components as follows:
a. If the fair value of one settlement alternative is the same as the other, the fair
value of the equity component is zero, and hence the fair value of the compound
financial instrument is the same as the fair value of the debt component.
b. If the fair values of the settlement alternatives differ, the fair value of the equity
component will be greater than zero, in which case, the fair value of the
compound financial instrument will be greater than the fair value of the debt
component.
• If the entity has the right to choose settlement between cash (or other assets)
or equity instruments, the entity has not granted a compound instrument.
• In such case, the entity shall determine whether it has a present obligation to
settle in cash and shall account for the share-based payment transaction
accordingly.
• If the entity has a present obligation to settle in cash, it shall account for the
transaction as a cash-settled share-based payment transaction.
• If the entity has no present obligation to settle in cash, it shall account for the
transaction as an equity-settled share-based payment transaction.