IASB amends IFRS 2 for vesting conditions and cancellations
17 Jan 2008
The IASB has amended IFRS 2 Share-based Payment to clarify the terms 'vesting conditions' and 'cancellations'.
The amendments are as follows:
- Vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. Under IFRS 2, features of a share-based payment that are not vesting conditions should be included in the grant date fair value of the share-based payment. The fair value also includes market-related vesting conditions.
- All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. Under IFRS 2, a cancellation of equity instruments is accounted for as an acceleration of the vesting period. Therefore any amount unrecognised that would otherwise have been charged is recognised immediately. Any payments made with the cancellation (up to the fair value of the equity instruments) is accounted for as the repurchase of an equity interest. Any payment in excess of the fair value of the equity instruments granted is recognised as an expense.
The Board had proposed the amendment in an exposure draft issued on 2 February 2006. The amendment is effective for annual periods beginning on or after 1 January 2009, with earlier application permitted.
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