IFRS 2, Share-based Payment

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International Financial Reporting Standard (IFRS) 2
Share-based Payment

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International Financial Reporting Standard (IFRS) 2

IFRS 2
      Share-based Payment
      Issued in February 2004

      Recent amendments: June 2009
         "Group cash-settled share-based payment transactions"
         Amendments to IFRS 2

IFRS 2 Summary

Share-based payment transactions are recognized in the financial statements.
      Three types:
      (1) equity-settled share-based payment transactions
      (2) cash-settled share-based payment transactions
      (3) share-based payment transactions with a choice of settlement

Equity-settled share-based payment transactions
      --> increase in equity
      (1) measured by fair value of goods or services
      (2) if fair value of goods or services cannot be estimated reliably,
           --> fair value of equity instruments is used
      (3) fair value of equity instruments
           --> based on market prices

Cash-settled share-based payment transactions
--> increase in liability
(1) measured by fair value of liability

Share-based payment transactions with a choice of settlement
      (1) to the extent that a liability is incurred
           --> treat as a cash-settled share-based payment transaction
      (2) to the extent that no liability is incurred
           --> treat as an equity-settled share-based payment transaction

Amendments to IFRS 2, June 2009

Amendments in June 2009 reflected IFRIC 8 and IFRIC 11.
--> IFRIC 8 and IFRIC 11 were superseded by the amendments to IFRS 2 issued in June 2009

IFRIC 8
      "Scope of IFRS 2"
      Issued in January 2006

      IFRS 2 applies to the transactions where
      --> some or all of the goods or services received cannot be identified

      Unidentifiable goods or services to receive = (A) - (B)
      (A) fair value of share-based payment
      (B) fair value of identifiable goods or services to receive

IFRIC 11
      "IFRS 2 - Group and Treasury Share Transactions
      Issued in November 2006

      IFRS 2 also applies to the following transactions:
      (1) Entity is required to buy its own equity instruments to satisfy its obligations
      (2) Entity chooses to buy its own equity instruments to satisfy its obligations
      (3) Employee's rights were granted by the entity
      (4) Employee's rights were granted by shareholders of the entity
      (5) Share-based payments are settled by the entity
      (6) Share-based payments are settled by shareholders of the entity

      Equity instruments of a parent are granted to the employees of a subsidiary
      Case A: by the parent
      Case B: by the subsidiary

      Case A:
      --> Subsidiary recognises this as a
            equity-settled share-based payment arrangement
      --> Subsidiary recognises an increase in equity
            as contribution form the parent

      Case B:
      --> Subsidiary recognises this as a
            cash-settled share-based payment arrangement

Amendments to IFRS 2 in June 2009
      "Group cash-settled share-based payment transactions"

      --> reflects both IFRIC 8 and IFRIC 11

      Scope of IFRS 2
      --> IFRS 2 applies to the transactions where
            some or all of goods or services to receive cannot be identified

      Share-based payment transactions among group entities
      Case 1: Entity's own equity instruments
      Case 2: Equity instruments of the parent
      Case 3: Parent has an obligation to settle in cash
      Case 4: Employees transferred between group entities

      Case 1:
      Equity-settled, even if the entity buys its own equity instruments to award to employees
      Equity-settled, even if shareholders of the entity provide the entity's own equity instruments

      Case 2:
      Parent grants the equity instruments of the parent to the employees of subsidiary
      --> Subsidiary recognises this transaction as equity-settled

      Subsidiary grants the equity instruments of the parent to the employees of subsidiary
      --> Subsidiary recognises this transaction as cash-settled

      Case 3:
      Parent has an obligation to settle in cash for the amount linked to the price of (A) or (B)
      (A) equity instruments of parent
      (B) equity instruments of subsidiary

       --> Subsidiary recognises this transaction as equity-settled
       --> Parent recognises this transaction as cash-settled

      Case 4:
      Parent grants its own equity instruments to the employees of Subsidiary One
      --> Employee transfers to Subsidiary Two

      If subsidiaries have no obligation --> equity-settled
      If subsidiaries have obligation --> cash-settled

      Subsidiary One and Two each measures the fair value of services
      --> for the period the employee worked for each subsidiary

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