Chapter 10 - Share-based Payment

Question 1

What are the two types of share-based payments?

Answer 1

Equity settled and cash settled

Question 2

What is a equity-settled share based payment?

Answer 2

The entity settles the transaction in shares of share options

Question 3

What is a cash-settled share based payment?

Answer 3

The entity settles the transaction in cash based on its share price

Question 4

What is the accounting entry for an equity settled share based payment?

Answer 4

Dr Asset

CR Equity

Question 5

What are the two valuation methods for equity based schemes?

Answer 5

Used to pay suppliers - direct

Used to pay employees - indirect

Question 6

What is the grant date?

Answer 6

The date at which the entity and the other party to the relationship

Question 7

If there is no vesting conditions attached to a share-based payment, how is this accounted for?

Answer 7

For full at the grant date

Question 8

What are vesting conditions?

Answer 8

Conditions that the counter party must meet the entity should account for the receipt of services over the besting period

Question 9

What are the two types of vesting conditions?

Answer 9

Market based and non-market based

Question 10

How should we account for after the vesting period?

Answer 10

No further adjustments

Question 11

How do you account for cancellation in a scheme?

Answer 11

Immediately recognises the total remaining share-based payment, payments made to employees are counted as a deduction and anything in excess of fair value to profit and loss