402 / 488
Chapter
34/
Share-Based Payments (IFRS 2)
391
Tax Consequences
May
3],
20X8
Compensation charge [5,000 x (20 - 3) x 5]
Employee benefits expense (425,000 - 266,667)
Equity (separate component)
Recording shares issued
Dr Equity accumul ation account
Cr Equity share capita l
Share premium
August
1,
20X8
Cash received 5,000 x 17 x $3
Share premium
Intrinsic value
(Share price - Exercise price)
Options expected to vest
Tax benefit (intrinsic value)
Compensation expen se
(cumulative)
Deferred tax asset
@
30% of
tax benefit
Tax receivable
Movement in deferred
tax asset
Recognized in profit/loss
Recognized in equity
May
31
20X6 May
31
20X7
$4
$7
90,000
80,000
$.
s
180,000'
373,333 '
225,000
266,667
54,000
112,000
54,000
58,000
54,000
26,000'
32,000
(balance)
425,000
158,333
158,333
425,000
85,000
340,000
255,000
255,000
May
31,
20X8 August
1,
20X8
(vesting date)
(exercise date)
$10
$ 11
85,000
85,000
$.
$.
850,000
945 ,000
425,000
425,000
255,000
283,500'
143,000
(255,000)
47,500'
(127,500)
95,500
(127,500)
(balance)
,
(90,000
x
4
x
112)
, (80,000
x
7
x
2/3)
s
(945
x
0.3)
, (266,667
x
30%
-
54,000)
s
(425,000
x
30%
-
54,000
-
26,000)
IFRIC 8,
Scope of [FRS
2, clarifies that IFRS 2,
Share-Based Payment,
applies to arrangements where an
entity makes share-based payments for apparently ni l or inadequate consideration.
9. RECENT AMENDMENTS TO IFRS 2 EFFECTIVE FOR ANNUAL PERIODS BEGIN–
NING ON OR AFTER JANUARY 1,2009
9.1
On January 17, 2008 , the IASB issued amendments to IFRS 2. These revisions primarily
seek to clarify the definition of "vesting conditions" and also the accounting treatment of
cancellations by the counterparty to a share-based payment agreement. These revisions to the
Standard are effective for annual periods beginning on or after January I, 2009, with earlier
application permitted. The main amendments to IFRS 2 are briefly explained below .
9.1.1
Vesting conditions.
Vesting conditions are terms attached to a share-based payment arrangement that must be met by
the counterparty to the agreement (say, an employee) before getti ng entitled to receive cash , other
assets, or equity instruments of the entity. According to the existi ng requirements of IFRS 2 vest–
ing conditions include
a. Service conditions, that is, stipulations in a share-based payment arrangement that the
counterparty (say, an employee) should work for the entity for a period of time (say, 5
years of continuous service) before qualifying for the share-based payment; and
b. Performance conditions, that is, requirement in a share-based agreement that requires a
counterparty (say, the newly appointed "chief executive officer") to achieve a predeter–
mined "performance" target over a period of time (say, increase of net margin from 5% to
15% in three years from the date of share-based payment arrangement).