The Exposure Draft (ED) brings together a collection of three proposed amendments to IFRS 2.

The first proposal provides guidance on the accounting for the effects of vesting conditions on the measurement of a cash-settled share-based payment. The second considers the classification of share-based payment transactions with net settlement features, while the third focuses on accounting for 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.

IFRS 2 cur­rently con­tains no guid­ance on how vesting con­di­tions affect the fair value of li­ab­il­it­ies for cash-settled share-based pay­ments. The IASB pro­poses to clarify that the ac­count­ing in the case of cash-settled share-based pay­ments should follow the same ap­proach as used for equity-settled share-based pay­ments.

In addition, at the moment IFRS 2 does not spe­cific­ally address situ­ations where a cash-settled share-based payment changes to an equity-settled share-based payment because of modi­fic­a­tions of the terms and con­di­tions.

The propsial is that in the case of such modi­fic­a­tions, the ori­ginal li­ab­il­ity re­cog­nised in respect of the cash-settled share-based payment is dere­cog­nised and the equity-settled share-based payment is re­cog­nised at the modi­fic­a­tion date fair value to the extent ser­vices have been rendered up to the modi­fic­a­tion date.

Any dif­fer­ence between the car­ry­ing amount of the li­ab­il­ity as at the modi­fic­a­tion date and the amount re­cog­nised in equity at the same date would be re­cog­nised in profit and loss im­me­di­ately.

The deadline for comment is 25 March 2015.

The exposure draft, ED/2014/5 Clas­si­fic­a­tion and meas­ure­ment of share-based payment trans­ac­tions, is here: http://www.ifrs.org/Current-Projects/IASB-Projects/IFRS-2-Clarifications-Classification-and-Measurement/ED-November-2014/Pages/Exposure-Draft-and-Comment-letters.aspx