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Hello Tutor,
Could you kindly explain it to me that in equity settled share based payment why do we credit equity? How is it increasin, please?
Thank you.
If you plan to issue shares in 3 years when the options vest:
STEP 1
Over the vesting period
Dr P&L Cr Share option reserve (or something similar) – THIS IS THE CREDIT TO EQUITYSTEP 2
When options vest, employee will pay company a small amount of money (exercise price)
Dr Cash
Dr Share option reserve
Cr SC
Cr SPIf we acquire goods/services from another company and settle the payment in equity/share based payments, we won’t be getting anything in return for the shares we are issuing right now as the payment, still we credit the equity?
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