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IFRIC 11 — IFRS 2: Group and Treasury Share Transactions

References

  • IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
  • IAS 32 Financial Instruments: Presentation
  • IFRS 2 Share-based Payment

History

DateDevelopmentComments
19 May 2005 IFRIC D17 IFRS 2 — Group and Treasury Share Transactions published Comment deadline 18 July 2005
2 November 2006 IFRIC 11 IFRS 2: Group and Treasury Share Transactions issued Effective for annual periods beginning on or after 1 March 2007
18 June 2009 Superseded by Group Cash-settled Share-based Payment Transactions (see IFRS 2 Share-based Payment) Effective for annual periods beginning on or after 1 January 2010

Summary of IFRIC 11

IFRIC 11 provides guidance on applying IFRS 2 in three circumstances:

  • 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 - is this an equity-settled or cash-settled transaction?
  • A parent grants rights to its equity instruments to employees of its subsidiary – how to account in the individual entities' financial statements?
  • A subsidiary grants rights to equity instruments of its parent to its employees – how to account in the individual entities' financial statements?

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.

Therefore, in the subsidiary's individual financial statements, the accounting treatment of transactions in which a subsidiary's employees are granted rights to equity instruments of its parent would differ, depending on whether the parent or the subsidiary granted those rights to the subsidiary's employees. This is because the IFRIC concluded that, in the former situation, the subsidiary has not incurred a liability to transfer cash or other assets of the entity to its employees, whereas it has incurred such a liability in the latter situation (being a liability to transfer equity instruments of its parent).

Effective date

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

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.