share-based payment

  1. Equity settled share-based payment
    entities receive good/service as consideration for its own equity
  2. Equity settled share-based payment -employees- accounting treatment
    Measure indirectly the FV of the equity granted at the grant date ie. announcement date
  3. Equity settled share-based payment -employees- 1. Vested immediately
    Recognize all expense and all Equity at Grant date
  4. Equity settled share-based payment -employees- 2. Service testing conditions (employee has to complete a specified period of service):
    Recognize expense and Equity over the vesting period
  5. Equity settled share-based payment -employees- 3. Performance testing conditions (achieve performance targets) -vesting period
    • Estimate the length of vesting period at grant date
    • 1. Based on market conditions: The estimated vesting period is not Subsequently revised
    • 2. Not Based on market conditions: The estimated vesting period can be Subsequently revised
  6. During vesting and after vesting
    • during:Amount recognized is based on the best available estimate of the number of equity instruments expected to vest (ie. est. number of staff who will stay to collect equity); this estimate can be revised
    • At vesting: Revise the estimate equal to the number of equity that ultimately vested; no amount is recognized if equity instruments granted do not vest
    • after vesting: No subsequent adjustment to Total Equity after the date; cannot reverse the amount recognized for services received from employee; but can transfer the equity to retained earnings
  7. Equity settled share-based payment - subsequent modifications / new Equity replaces old equity
    Recognize the effects that increase the total fair value of the arrangement(increase the liability of company); do nothing if it is a decrease
  8. Equity settled share-based payment -parties other than employees- accounting treatment
    If the FV of goods received can be estimated reliably, equity is measured directly at the fair value of goods received at the dates when the goods is obtained; otherwise, measure indirectly the fair value of the equity at the date when the entity obtain the goods
  9. cash settled share-based payment
    • Acquired Goods or service by incurring a liability to transfer cash based on the price of equity
    • Initial recognition; measure the goods received and liability incurred at the fair value of the liability
    • Subsequent; remeasure the fair value of the liability at the end of each reporting. Settlement with changes in Fair Value recognized in profit or loss
    • The remeasurement of the fair value of the liability continues even after the vesting period (stops When the liability is settled)
  10. Equity settled share-based payment - cancellations
    • Accountable as an acceleration of vesting; recognize immediately the amount that would have been recognized over the remaining vesting period
    • Payment made to employees accounted for as a repurchase of equity interest (deduction from equity)
    • If the payment exceeds the fair value of the equity granted at repurchase date, the excess is recognized as expense in profit and loss
Card Set
share-based payment
share-based payment