IFRS 2IG Illustrative disclosures

IG23 The following example illustrates the disclosure requirements in paragraphs 44-52 of the IFRS.

Extract from the Notes to the Financial Statements of Company Z for the year ended 31 December 2005.

Share-based Payment

During the period ended 31 December 2005, the Company had four share-based payment arrangements, which are described below.

Type of arrangement

Senior management share option plan

General employee share option plan

Executive share plan

Senior management share appreciation cash plan

Date of grant

1. January 2004

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IFRS 2 Objective Scope Recognition


1 The objective of this IFRS is to specify the financial reporting by an entity when it undertakes a share-based payment transaction. In particular, it requires an entity to reflect in its profit or loss and financial position the effects of share-based payment transactions, including expenses associated with transactions in which share options are granted to employees.


2 An entity shall apply this IFRS in accounting for all share-based payment transactions, whether or not the entity can identify … Continue reading

IFRS 2 Equity-settled share-based payments


10 For equity-settled share-based payment transactions, the entity shall measure the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted.… Continue reading

IFRS 2 Cash-settled share-based payments

Cash-settled share-based payment transactions

30 For cash-settled share-based payment transactions, the entity shall measure the goods or services acquired and the liability incurred at the fair value of the liability, subject to the requirements of paragraphs 31–33D. Until the liability is settled, the entity shall remeasure the fair value of the liability at the end of each reporting period and at the date of settlement, with any changes in fair value recognised in profit or loss for the period.… Continue reading

IFRS 2 Share-based payment and withholding tax

Share-based payment transactions with a net settlement feature for withholding tax obligations

33E Tax laws or regulations may oblige an entity to withhold an amount for an employee’s tax obligation associated with a share-based payment and transfer that amount, normally in cash, to the tax authority on the employee’s behalf. To fulfil this obligation, the terms of the share-based payment arrangement may permit or require the entity to withhold the number of equity instruments equal to the monetary value of … Continue reading

IFRS 2 Share-based payments and cash alternatives

Share-based payment transactions with cash alternatives

34 For share-based payment transactions in which the terms of the arrangement provide either the entity or the counterparty with the choice of whether the entity settles the transaction in cash (or other assets) or by issuing equity instruments, the entity shall account for that transaction, or the components of that transaction, as a cash-settled share-based payment transaction if, and to the extent that, the entity has incurred a liability to settle in cash … Continue reading

IFRS 2 Group share-based payments

Share-based payment transactions among group entities (2009 amendments)

43A For share-based payment transactions among group entities, in its separate or individual financial statements, the entity receiving the goods or services shall measure the goods or services received as either an equity-settled or a cash-settled share-based payment transaction by assessing:

  1. the nature of the awards granted, and
  2. its own rights and obligations.

The amount recognised by the entity receiving the goods or services may differ from the amount recognised by the … Continue reading

IFRS 2 Disclosures

44 An entity shall disclose information that enables users of the financial statements to understand the nature and extent of share-based payment arrangements that existed during the period.

45 To give effect to the principle in paragraph 44, the entity shall disclose at least the following:

  1. a description of each type of share-based payment arrangement that existed at any time during the period, including the general terms and conditions of each arrangement, such as vesting requirements, the maximum term of
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IFRS 2AG Fair value of equity instruments

Appendix B Application guidance

This appendix is an integral part of the IFRS.

Estimating the fair value of equity instruments granted

B1 Paragraphs B2–B41 of this appendix discuss measurement of the fair value of shares and share options granted, focusing on the specific terms and conditions that are common features of a grant of shares or share options to employees. Therefore, it is not exhaustive. Furthermore, because the valuation issues discussed below focus on shares and share options granted to … Continue reading

IFRS 2AG Modifications to equity-settled share-based payments

Modifications to equity-settled share-based payment arrangements

B42 Paragraph 27 requires that, irrespective of any modifications to the terms and conditions on which the equity instruments were granted, or a cancellation or settlement of that grant of equity instruments, the entity should recognise, as a minimum, the services received measured at the grant date fair value of the equity instruments granted, unless those equity instruments do not vest because of failure to satisfy a vesting condition (other than a market condition) … Continue reading