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We comment on FRED 61 ‘Draft amendments to FRS 102 – Share-based payment transactions with cash alternatives’

  • Deloitte comment letter on FRED 61 ‘Draft amendments to FRS 102 – Share-based payment transactions with cash alternatives’ Image

01 Jun 2015

We have published our comment letter on the Financial Reporting Council’s (FRC’s) Financial Reporting Exposure Draft (FRED) 61 ‘Draft amendments to FRS 102 – Share-based payment transactions with cash alternatives’.

FRED 61 proposes a narrow scope amendment to clarify and simplify the accounting for share and share option awards where a cash settlement alternative exists.  It seeks to amend paragraph 26.15 of Financial Reporting Standard (FRS) 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland to:

align the requirements in FRS 102 with full IFRS and previous UK and Irish GAAP in cases where the entity can choose to settle in cash or equity;

retain the current requirements of FRS 102 to recognise a liability where the recipient can require settlement in cash; and

generalise the requirements to include those cases where the settlement method is dependent on an external event. 

We are supportive of the proposals.  However, we disagree with broadening the scope of paragraph 26.15 of FRS 102 to address those cases when the choice of settlement is dependent on an external event. 

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter.

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