IFRS 2 share-based payments
About
IFRS 2 outlines how a company reports its financials when it gives employees share-based payments, like stock options.
An organization needs to include share-based payment transactions in its financial statements. These transactions can involve employees or other parties and can be settled with cash, assets, or the organization's own stocks. An organization must include the effects of share-based payment transactions in its financial statements. These transactions may involve costs associated with granting employees share options.
Frequently asked questions
What is share-based payment under IFRS 2?
IFRS 2 Share-based Payment requires companies to disclose share-based payment transactions in their financial statements. These transactions can involve giving shares, share options, or share appreciation rights to employees or other parties. The payment can be made in cash, assets, or company shares. This includes deals with employees or others that will be paid in cash, assets, or company shares.
What is an example of a share-based payment?
The expense for cash settled transactions is the cash paid by the company. Employees can receive cash payments through share appreciation rights. These cash payments are based on the increase in the share price of a specific number of company shares. The increase is measured during a specific time period.
Standard history (as per IFRS)
In February 2004 the International Accounting Standards Board (Board) issued IFRS 2 Share‑based Payment. The Board made changes to IFRS 2 in January 2008. These changes were made to make it clearer. In June 2009, the Board included guidance from two related Interpretations, IFRIC 8 and IFRIC 11.
In June 2016 the Board issued Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2). This amended IFRS 2 to clarify the accounting for (a) the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments; (b) share-based payment transactions with a net settlement feature for withholding tax obligations; and (c) a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.
Other Standards have made minor consequential amendments to IFRS 2. They include IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 11 Joint Arrangements (issued May 2011), IFRS 13 Fair Value Measurement (issued May 2011), Annual Improvements to IFRSs 2010–2012 Cycle (issued December 2013), IFRS 9 Financial Instruments (issued July 2014), Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Definition of Material (Amendments to IAS 1 and IAS 8) (issued October 2018).
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