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Group cash-settled share-based payment transactions

13 Dec 2007

The IASB has published for comment an exposure draft of proposed amendments to IFRS 2 'Share-based Payment' and to IFRIC 11 'IFRS 2 – Group and Treasury Share Transactions'.

The proposals would provide guidance on how a group entity that receives goods or services from its suppliers (including employees) should account for the following arrangements, known as group cash-settled share-based payment transactions:

  • Arrangement 1 – the entity's suppliers will receive cash payments that are linked to the price of the equity instruments of the entity.
  • Arrangement 2 – the entity's suppliers will receive cash payments that are linked to the price of the equity instruments of the entity's parent.

Either way, it is the entity's parent that has an obligation to make the required cash payments to the entity's suppliers, not the entity itself.

The proposed amendment to IFRS 2 clarifies that IFRS 2 applies to such arrangements even if the entity that receives goods or services from its suppliers has no obligation to make the required share-based cash payments. Under the proposal, the entity should measure the goods or services in accordance with the requirements for cash-settled share-based payment transactions.

Comment deadline is 17 March 2008. Click for: