IFRIC 11 interprets IFRS 2

  • IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

05 Nov 2006

The International Financial Reporting Interpretations Committee (IFRIC) has published IFRIC 11 'IFRS 2 – Group and Treasury Share Transactions'.

The Interpretation addresses how to apply IFRS 2 Share-based Payment to share-based payment arrangements involving an entity's own equity instruments or equity instruments of another entity in the same group (eg equity instruments of its parent).

IFRIC 11 provides:

 

Overview of IFRIC 11
  • Share-based payment involving an entity's own equity instruments in which the entity chooses or is required to buy its own equity instruments (treasury shares) to settle the share-based payment obligation: These should always be accounted for as equity-settled share-based payment transactions under IFRS 2.
  • A parent grants rights to its equity instruments to employees of its subsidiary: Assuming the transaction is accounted for as equity-settled in the consolidated financial statements, the subsidiary must measure the services received using the requirements for equity-settled transactions in IFRS 2, and must recognise a corresponding increase in equity as a contribution from the parent.
  • A subsidiary grants rights to equity instruments of its parent to its employees: The subsidiary accounts for the transaction as a cash-settled share-based payment transaction.

IFRIC 11 is effective for annual periods beginning on or after 1 March 2007. Earlier application is permitted. Click for:

 

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