PENSION SCHEME AND SHARE BASED PAYMENT

This topic has 3 replies, 2 voices, and was last updated 3 days ago by Stephen Widberg.

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June 4, 2022 at 11:14 pm #657388
syedmushahid
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Hi Stephen
Can you suggest what items should be recognised in cash flow statement if questions comes related to pension (benefit and contribution) and share based payment ( option and SARS)
Kind regards
Syed
June 5, 2022 at 3:19 pm #657445
Stephen Widberg
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Pension:

1. Operating cash flows – ADD BACK WHATEVER HAS BEEN CHARGED IN THE P&L (non-cash item)
2. Operating cash flows – DEDUCT CONTRIBUTIONS PAID

SBP

Equity settled – add back SBP expense
Cash settled – add back SBP expense

If options / SARs are exercised there will be additional cash flows – I would just do what it says in the question.
June 5, 2022 at 9:14 pm #657478
syedmushahid
- Topics: 18
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Thanks Stephen for the reply

Just to clear myself what I understand from your answer is

Cash flow from pension scheme

Present and past service charges and finance cost needs to be added back. Contribution paid needs to be minus from operating cash flow

Cash flow from share based payment

Expenses related to them needs to be added back to operating cash flow

Correct me if I am wrong
Also can you please explain what will be the impact on cash flow if option and SARS are exercised

Kind regards
June 22, 2022 at 10:13 am #659107
Stephen Widberg
Moderator
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Exercise of SARs / option

SARs – company pays out cash – operating outflow

Option – Company receives cash when employee pays exercise price – financing inflow
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