SMEs - EQUITY AND

SHARE-BASED
PAYMENT
 EQUITY

Is the residual interest in the assets of an

entity after deducting all of its liabilities.
 MEASUREMENT OF EQUITY SHARE
measured at FAIR VALUE of the cash or other
resources received or receivabl, net of direct
issue cost.
EQUITY INSTRUMENTS
01. BONUS ISSUE

Bonus issue or stock dividend is the

issue of new shares to
shareholders in proportion to their
existing holdings.
 02. SHARE SPLIT

A share split is the dividing of an

entity’s shares into multiple shares.

• SPLIT UP means the original shares are replaced by a LARGER

NUMBER accompanied by a reduction in the par or stated value.

• SPLIT DOWN means that the original shares are replaced by a

SMALLER NUMBER accompanied by an increase in par or stated
value
 03. TREASURY SHARES

Treasury shares are the equity

instrument of an entity that have
been issued and subsequently
reacquired by the entity.

NOTE: THE ENTITY SHALL NOT RECOGNIZE A GAIN OR LOSS ON THE PURCHASE, SALE, ISSUE OR
CANCELATION OF TREASURY SHARES.
COMPOUND FINANCIAL INSTRUMENT

- that contains both a liability and an equity

components, an entity shall allocate the proceeds
between the liability component and the equaity
components.

 Transaction costs
DISTRIBUTIONS TO OWNERS

An entity shall reduce equity for the amount of

distributions to its owners, net of any related
income tax benefit.

 Sometimes, an entity distributes assets other

than cash as dividends to its owners.
SHARE- BASED PAYMENT
TRANSACTION
 Share-based payment transactions include all of the following:

a. Equity- settled share based payment transactions, in which the entity acquires goods

and services as consideration for equity instruments of the entity including shares and

share options.

b. Cash- settle share based paymnet transactions, in which the entity acquires goods or

services by incurring liabilities to the supplier of goods and services for amounts that are

based on the entity’s equity intruments.

c. Provide either the entity or the supplier with a choice of whether the entity settles the

transaction in cash or by issuing equity instruments.

 MEASUREMENT OF EQUITY SETTLED TRANSACTION

• Transactions with employees, the fair value of the

equity instrument granted.

• Transactions with nonemployees, the fair value of

the goods or services received.
 SHARE OPTIONS

Are agranted to officers and key employees to enable

them to acquire shares of the entity during a specified
period upon fulfillment of certain conditios at a
specified price.

 The compensation must be measured at the fair value of the share options at the date of
grant
 CASH SETTLED- SHARE APPRECIATION RIGHT

A share appreciation right entitles an employee to

receive cash which is equal to the excess of the
market value of the entity’s share over a
predertermined price for a stated number of shares

Note: The compensation is based on the fair value of the liability at the reporting date and shall be
remeasured at every year-end until it is finally settled.
THANK YOU