ifrs 2 Flashcards
what is share based payment? Accounting entry?
when we promise to issue shares in exchange for something in future.
entry:
machine debit
equity credit
or
salaries debit
equity credit
3 types of Share based payment are
-equity settled (issue of shares)
-cash settled (cash equal to MP at payment date)
-share options
All SBP transactions are recorded at
fair value
what is direct and indirect measurement?
direct- transaction recorded at fair value of goods received. normally applied in case of goods, machine etc.
indirect- when fv of goods received cannot be calculated, then transaction is recorded at fair value of shares
. normally in case of employee payment.
what is unconditional grant and it’s double entry?
a reward to employees. it’s booked in PnL immediately.
debit- grant
credit- equity
what is conditional grant and it’s accounting treatment?
it is payable upon condition being met. the expense is booked spread over vesting period (matching principle)
what are the two different types of vesting conditions?
-service years
-performance based (market and non market performance targets)
what is service vesting condition and it’s accounting treatment?
the condition can be:
minimum yrs of service
-it is booked on expectation of % employees vesting
-estimated vesting must be revised at each reporting date.
-if not met, previous equity will be reversed in PnL as an income
what are the two types of performance vesting conditions? and their accounting treatments?
non market performance:
-vesting period may change
-same treatment as service based
-revise estimate each year
market performance:
-vesting period will be constant. we will use the one at grant date .no need to check at each reporting date
-if not met, then no reversal in PnL. only within equity transfer
in equity settled SBPs, what date fair value of option do we use?
grant date
what is the double entry for conditional grant yearly expense?
debit- PnL
credit- equity or share based payment reserve
how is yearly expense of conditional grant calculated?
cumulative:
number of employees* number of shares * fair value at grant date *percentage of employees expected to vest in current yr * (current year/total vesting period)
vesting period in non market performance condition can change?
it will vary. All expense of SBP will be booked on basis of expected vesting period at each year end. Means vesting period will be revised each year.)
performance market condition vesting period
not going to change due to volatility. we will always use expected vesting period of grant date.
treatment for grant cancellation?
we will book the remaining expense in PnL immediately. (saza)
entry:
PnL debit
SBPR credit
amount of above entry:
employees sharesFV at grant date