- This topic has 3 replies, 2 voices, and was last updated 5 years ago by
.
- Posts
EQUITY SETTLED SHARE BASED PAYMENTS
How to deal with changes?
Sometimes, an entity might change the terms of the share-based payment transaction.
Modification of the terms on which equity instruments were granted depends on the fair value of the new equity instruments:1. * If the fair value of the new instruments is greater than the fair value of the old instruments, then the incremental amount is recognized over the remaining vesting period (or immediately if modification happens after the vesting period).
2. * If the fair value of the new instruments is lower than the fair value of the old instruments, the original fair value of the equity instruments granted should be expensed as if the modification never occurred.
If an entity cancels or settles the equity instruments, then it is recognized as an acceleration of the vesting period and any remaining unrecognized amount is recognized immediately.
IN CASE OF POINT 1is it like we keep recognizing at old value and difference of old and new value is recognize over vesting period.
IN CASE OF POINT 2
What does that mean”the original fair value of the equity instruments granted should be expensed as if the modification never occurred.”?? is it we continue recording it at new lower value or at old value and ignore new value?
POINT 1
They will effectively be two charges. The original charge over the original vesting period and an extra charge from the date of the modification to the end of the vesting period.
POINT 2
Continue to recognise the original charge over the vesting period. Needless to say this makes companies very cross.
for point 2 we will not consider decrease. and we use grant date fair vale.
- The topic ‘IFRS 2 SHARE BASED PAYMENTS’ is closed to new replies.