Share option
In employee share-based payment arrangements, account for goods or services and the resulting equity or liability according to the arrangement’s terms and IFRS 2. For diluted EPS, use IAS 33’s prescribed method to determine the incremental shares, and include options only when they are dilutive. An option’s fair value can include time value and other factors; it is not necessarily the share price less exercise price.
Worked example
An employee receives an option to buy 100 shares at $10 each. If the option becomes exercisable and the share price is $14, its intrinsic value is $400, but its fair value can differ because other valuation factors matter.
Common mistake
Assuming an option obliges its holder to buy shares, or treating intrinsic value as automatically equal to grant-date fair value.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |
