The exposure draft addresses how entities should account for share-based payment transactions, including grants of share options to employees. The proposals reflect the following principles:

• When goods or other services are received in exchange for a share-based payment, an expense should be recognised.
• Recognition of the expense should be over the period in which the services involved are rendered or as the goods involved are received.
• Measurement of the expense should be made by reference to fair value.

Comments on the proposals are requested by 7 March 2003. If a standard is issued by the end of 2003, it is expected to be effective for periods beginning on or after 1 January 2004.

The UK Accounting Standards Board has simultaneously published the exposure draft as FRED 31 Share-Based Payment. The FASB is also expected to publish the exposure draft, together with a summary of the key differences with current US accounting standards, and an invitation to comment.

The electronic version of ED 2 will be posted on the IASB's Website on 18 November (subscribers may download it now). Please note that ED 2 is published in three separate PDF documents: Requirements, Basis for Conclusions, and Implementation Guidance.

Click for:

• Background Information on the project (including a summary of the main proposals).
• IASB Press Release (PDF 33k).