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IFRS 2, Share-based payment - Coggle Diagram

- - - - which are dealt with under IFRS 3, Business Combinations
- - - - liability, OR
      - an increase in the equity of the company
  - - - Goods
        
        Date when they are received
      - services
        
        vest immediately
        
        can be assumed that these are in consideration of past services
        
        expense should be recognised immediately.
        
        vest in the future
        
        assumed that the equity instruments relate to future services
        
        recognition is therefore spread over that period.
- - - - Fair value should be based on market price wherever this is possible
    - - In the case where shares and share options not be traded on an active market
      - IFRS 2 does not set out which pricing model should be used
      - but describes the factors that should be taken into account
      - It says that ‘intrinsic value’ should only be used where the fair value cannot be reliably estimated
        
        Intrinsic value is the difference between the fair value of the shares and the price that is to be paid for the shares by the counterparty.
  - - - if a company grants share options to employees that vest in the future only if they are still employed
        
        then the accounting process is as follows
        
        The fair value of the options will be calculated at the date the options are granted.
        
        This fair value will be charged to profit or loss equally over the vesting period, with adjustments made at each accounting date to reflect the best estimate of the number of options that will eventually vest
        
        Shareholders’ equity will be increased by an amount equal to the charge in profit or loss. The charge in the income statement reflects the number of options vested. If employees decide not to exercise their options, because the share price is lower than the exercise price, then no adjustment is made to profit or loss. On early settlement of an award without replacement, a company should charge the balance that would have been charged over the remaining period.
- - - - The thinking behind this
        
        these conditions have already been taken into account when fair valuing the shares
      - For example
        
        The market-based condition ie the increase in the share price
  - - - employment condition