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FRED 61 — Draft amendments to FRS 102 – Share-based payment transactions with cash alternatives


The accounting requirements of FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland in relation to share-based payment transactions where the entity can choose to settle in cash or equity instruments currently differ from those under International Financial Reporting Standard (IFRS) 2 Share-based Payment and old UK GAAP Financial Reporting Standard (FRS) 20 Share-based Payment.  Entities and their advisors informed the FRC that the requirements under FRS 102 were more “onerous to apply” and, as a result, might result in “inappropriate accounting outcomes”.

Project Milestones

As a result of this feedback, FRED 61 seeks to amend paragraph 26.15 of FRS 102 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.

The FRC highlights that, as a result of these amendments, “entities would generally be able to continue with their existing accounting practices applied under previous UK and Irish GAAP which should reduce transition and application costs of FRS 102”.

The amendments are proposed to be effective from 1 January 2015.

Current status of the project

The changes to FRS 102 proposed bv FRED 61 were incorporated into the standard by amendments published in July 2015.

Correction list for hyphenation

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