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1 Do we account for both cash and equity settled share based payments in a similar manner?
2If the vesting period is 3 years, for the first two yrs the liability and expense would be recorded at the fair value of shares at the grant date. Am I right in saying that?
3And what about the third year? Do we measure it at the fair value at that date?
4 when do we use the intrinsic value?
Please correct me if I’m wrong.
Thank you very much.
1. Yes they’re both accounted for by spreading the fair value over the vesting period based on the number of share based payments we expect to exercise. The difference is the entry for equity settled is to equity and cash settled is to liabilities.
2. No. If it is equity settled we use the fair value at the grant date but if cash settled it is the fair value at the reporting date.
3. No. The same rules as in 2 apply.
4. We don’t use the intrinsic value. The intrinsic value is incorporated in the fair value but that isn’t something that you need to worry about until P4.
Hope that clears up any confusion.
Thanks
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