A presentation by the IASB project manager identified two issues that the project would need to address:

• should a transaction paid for in shares be accounted for the same way as a transaction paid for in cash, and
• if so, how should it be measured.

The arguments for recognition included that such a transaction was a purchase transaction like any other where resources were acquired and consideration given in exchange for the resources.

The arguments against recognition were: The company is not party to the transaction (it is a transaction with owners); no services are received (employees paid a salary already); no cost and therefore no charge; EPS would be hit twice; and that there are adverse effects to such a charge (reduction in share schemes). The IASB discussed each of these, and rejected the arguments in each.

The share-based payments can be measured at historic cost, intrinsic value, or fair value. Each of these was discussed. Practical problems encountered with measurement include unlisted companies. Measurement date can either be grant date, service date, vesting date, or exercise date. The merits of each were discussed with no conclusion being reached as to which one was preferred by Board members.

IASB will analyse the responses received by the national standard setters around the world who exposed the G4+1 Paper.

The Board concluded that this is a project they should address. A paper will be presented and discussed with the SAC at the October SAC meeting.