Accounting for share-based payments under IFRS 2

Sarah Baxendale FCA sets out the key considerations for applying IFRS 2 Share-based payment, particularly when determining whether arrangements should be treated as equity-settled or cash-settled

The accounting requirements for share-based payments are detailed and complex. IFRS 2 Share-based payment (IFRS 2) sets out the principles for the recognition, measurement, presentation and disclosure when an entity undertakes a share-based payment transaction.

IFRS 2 is one of the most complicated standards to apply. It requires careful analysis of the underlying documentation to identify:

• whether the transaction is in the scope of IFRS 2;

• whether the transaction meets the definition of an equity-settled share-based payment or a cash-settled share-based payment;

• whether there are any vesting conditions;

• who the counterparty is and what goods or services the entity is receiving or acquiring; and