While the general accounting principles have remained largely unchanged since the introduction of MFRS 2 ‘Share-based Payment’ in 2004, the accounting of 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.
As explained in our article ‘Insights into MFRS 2 – What is MFRS 2?’, an entity recognises goods or services received or acquired in a share-based payment arrangement when it obtains the goods or as the services are received. Share-based payment transactions can be settled either via shares or cash.
This article discusses the basic principles that apply to both equity-settled and cash-settled share-based payment transactions with employees or others providing similar services. A more detailed explanation of the differences between the accounting treatment for equity-settled and cash-settled share-based payment transactions is discussed in our articles ‘Insights into MFRS 2 – Equity-settled share-based payment arrangements’ and ‘Insights into MFRS 2 – Cash-settled share-based payment arrangements with employees’ which will be released soon.
Insights into MFRS 2
Basic principles of share-based payment arrangements with employees
How we can help
We hope you find the information in this article helpful in giving you some insight into aspects of MFRS 2. If you would like to discuss any of the points raised, please speak to your usual Grant Thornton contact.
