IFRS 2 – Share based Payments
Objective: To prescribe the accounting for a transaction in which an entity receives or acquires goods or services either as consideration for its equity or by incurring liabilities. All share based payment transaction must be recognized in the financial statement, using fair value measurement basis. An expense is recognized when the goods or service are consumed. The same recognition and measurement standards apply to both public and non-public companies.
1. Transaction in which good or services are received as equity instrument should be measured at fair value.
2. Transaction with employees and other providing similar services the entity is required to measure the fair value of the equity instrument.
3. For transactions measured at fair value of equity instrument, the fair value should be estimated at grant date.
4. For transaction measured at fair value of goods and services, the fair value should be estimated at the date receipt of those goods or services.
5. For transaction measured at fair value of goods and services, in general, vesting conditions, except market condition, are not taking into account when estimating the fair value of the shares or options at the relevant measurement date. Instead vesting condition is taken into account by adjusting the number of equity instrument.
6. The fair value of equity instruments granted to be based on market prices, if available, and to take into account the terms and conditions on which those equity instruments were granted.
Disclosure Include
1. The nature and extent of share-based payment arrangements that existed during the period.
2. How the fair value of the goods or services received or the fair value of the equity instruments granted, during the period.
3. The effect of share – based payment transaction on entity's profit or loss for the period.
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