IASB Narrowly Amends Share-Based Payments Standard

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By David R. Jones

June 20 — Entities can't consider vesting conditions alone when estimating the fair value of a cash-settled, share-based payment at the measurement date, under amendments the International Accounting Standards Board issued June 20 to its standard on share-based payments.

“Instead, vesting conditions, other than market conditions, shall be taken into account by adjusting the number of awards included in the measurement of the liability arising from the transaction,” according to IASB's narrow-scope amendments to International Financial Reporting Standard 2: Share-Based Payments.

Changes to Standard

The 26-page amendments are designed to clarify how to account for certain types of share-based payment transactions.

The changes address:

  •  the effects of vesting and non-vesting conditions on the measurement of cash-settled, share-based payments;
  •  share-based payment transactions with net settlement features for withholding tax obligations; and
  •  the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled.


Cash-Settled to Equity-Settled

IASB said it included provisions on changing the classification of cash-settled to equity-settled payments in response to stakeholder concerns.

“Interested parties told the Board that there is diversity in practice because IFRS 2 does not provide specific requirements for these situations and asked the Board to clarify the accounting,” according to the amendments.

Applying Amendments Retrospectively

The amendments come into force for reporting periods starting on or after Jan. 1, 2018.

Early application is permitted, but an entity must issue a disclosure if it applies the amendments to an earlier period.

“The Board also decided to permit an entity to apply all of the amendments retrospectively if, (and only if), the necessary information to do so is available without the use of hindsight,” the amendments said.

To contact the reporter on this story: David R. Jones in London at correspondents@bna.com

To contact the editor responsible for this story: Steven Marcy at smarcy@bna.com

For More Information

The amendments to IFRS 2 are available at http://eifrs.ifrs.org/eifrs/PDFArchive?viewFile=16181&categoryId=71.

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