IFRS 2 – Group cash-settled share-based payment arrangements
IFRS 2 Share-based Payment requires an entity to recognise as share-based payment transactions transfers of equity instruments of the entity’s parent (or another entity in the same group) to parties that have supplied goods or services to the entity.
Some constituents asked for guidance on whether, in the financial statements of an entity that receives services from its employees, similar arrangements that are cash-settled are also within the scope of IFRS 2.
For example, how should the following arrangements be accounted for in the financial statements of a subsidiary that receives services from its employees?
- Arrangement 1 – the employees of the subsidiary will receive cash payments from the parent that are linked to the price of the equity instruments of the subsidiary
- Arrangement 2 – the employees of the subsidiary will receive cash payments from the parent that are linked to the price of the equity instruments of the parent of the subsidiary.
Under either arrangement, the parent has an obligation to make the required cash payments to the employees. The subsidiary does not have any obligation to make such payments to its employees or provide them with its equity instruments.
This project began as an IFRIC project, but was later removed from the IFRIC's agenda and handed over to the IASB for resolution.
Current status of the project
|13 December 2007||Exposure Draft Proposed Amendments to IFRS 2 'Share-Based Payment' and IFRIC 11 'IFRS 2 - Group and Treasury Share Transactions' — Group and Treasury Share Transactions published||Comment deadline 17 March 2008|
|18 June 2009||Group Cash-settled Share-based Payment Transactions (Amendments to IFRS 2) issued and IFRIC 8 and IFRIC 11 withdrawn.||Effective for annual periods beginning on or after 1 January 2010|