Insights into MFRS 2

Modifications and cancellations of share-based payment arrangements with employees (Part 1)

07 Aug 20241 min read

Share-based payments have become increasingly popular over the years, with many entities using equity instruments or cash and other assets based on the value of equity instruments as a form of payment to directors, senior management, employees and other suppliers of goods and services.

While the general accounting principles have remained largely unchanged since the introduction of MFRS 2 ‘Share-based Payment’ in 2004, share-based payments is an area that is not well understood in practice and entities often have difficulty in applying the requirements to increasingly complex and innovative share-based payment arrangements.

Our ‘Insights into MFRS 2’ series is aimed at demystifying MFRS 2 by explaining the fundamentals of accounting for share-based payments using relatively simple language and providing insights to help entities cut through some of the complexities associated with accounting for these types of arrangements.

In this Part I of the article, it explains and provides examples of the accounting treatment for modifications and cancellations of share-based payment arrangements with employees.

Insights into MFRS 2