G4+1 Study Title: Accounting for Share-Based Payments
Published: February 2000

Conclusions:

• If an entity obtains goods and services from other parties, including employees and suppliers, with payment in shares or share options, the transaction should be recognised in the financial statements, with a corresponding charge to the income statement when those goods or services are consumed.
• Such a transaction should be measured at the fair value of the shares or options issued. In most cases, an option-pricing model should be applied to establish the fair value of an option.
• Vesting date is the appropriate measurement date. Vesting date is the date on which the other party (the employee or supplier), having performed all of the services or provided all of the goods necessary, becomes unconditionally entitled to the options or shares.
• If the shares or options are granted before the other party (employee or supplier) has fully performed, an estimate of the transaction amount should be accrued over the performance period between grant date and vesting date.

The study also addresses the treatment of lapsed options, options that are repriced or otherwise modified, employee share plans with cash alternatives, and share appreciation rights.

Related IASB Project: Completed Project: IFRS 2 Share-based Payment