IFRS 2 Fair value of equity instruments granted

IFRS 2 Fair value of equity instruments granted – Share-based payment transactions with employees are measured with reference to the fair value of the equity instruments granted (IFRS 2.11).

The fair value of a equity instrument granted is determined as follows (IFRS 2.16-17):

  • If market prices are available for the actual equity instruments granted – i.e. shares or share options with the same terms and conditions – then the estimate of fair value is based on these market prices. IFRS 2 Fair value of equity instruments granted
  • If market prices are not available for the equity instruments granted, then the fair value of equity instruments granted is estimated using a valuation technique.

IFRS 2 (IFRS Read more


Comparability – An enhancing qualitative characteristic that enables users to identify and understand similarities in, and differences among, items.

The Conceptual Framework provides the following guidance [Conceptual Framework 2.24 – 2.29]:

Users’ decisions involve choosing between alternatives, for example, selling or holding an investment, or investing in one reporting entity or another. Consequently, information about a reporting entity is more useful if it can be compared with similar information about other entities and with similar information about the same entity for another period or another date. Comparability

Comparing Financial Statements between companies is the qualitative characteristic that enables users to identify and understand similarities in, and differences among, items. Unlike the other qualitative characteristics, comparability does not relate to … Read more

Valuation of unquoted equity instruments

Valuation of unquoted equity instruments – The three valuation approaches and techniques described in IFRS 13 are: Valuation of unquoted equity instruments

IFRS 13  does not prescribe a specific valuation technique, but encourages the use of professional judgment together with consideration of all facts and circumstances surrounding the measurement. These three different valuation approaches could be applied in determining the fair value of an unquoted equity instrument. However, regardless of the valuation technique used, the fair value measurement of those equity instruments must reflect market conditions at the investor’s reporting date.

Market approach

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable … Read more

Measurement basis

Measurement basis – An identified feature of an item being measured (for example, historical cost, fair value or fulfilment value). OR

The result of measuring an asset, a liability or equity, or an item of income or expense, on a specified measurement basis. OR

The process of quantifying, in monetary terms, information about an entity’s assets, liabilities, equity, income and expenses.

Measurement basis describes various measurement bases, the information they provide and factors to consider when selecting a measurement basis. The 2010 Conceptual Framework did not include much guidance on measurement.

In developing the revised Conceptual Framework, the Board considered whether a single measurement basis should be mandated. However, it concluded that different measurement bases could provide useful information to … Read more

Presentation and disclosure

Presentation and disclosure are the meta terms used to describe how information about assets, liabilities, equity, income and expenses is provided in financial statements.

Presentation and disclosure have received a prominent combined place in the Conceptual Framework for Financial Reporting 2018.  After Recognition and Derecognition and Measurement it provides the end process of accounting for financial events and transactions in Financial Statements of a Reporting Entity and the elements of Financial Statements.

KEY POINTS Disclosure impairment

Presentation and disclosure as communication tools.

This chapter states that presentation and disclosure are communication tools. Effective communication of information in financial statements requires:

  • Focusing on presentation and disclosure objectives and principles rather than focusing on rules;
  • Classifying information in a manner that groups
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Qualitative characteristic

In full: Qualitative characteristic of useful financial information

A characteristic that makes financial information useful to the primary users of general purpose financial reports. Qualitative characteristic

In the Conceptual; Framework further guidance is provided – If financial information is to be useful, it must be relevant and faithfully represent what it purports to represent. The usefulness of financial information is enhanced if it is comparable, verifiable, timely and understandable. [Conceptual Framework 2.4]

Qualitative characteristic

The IASB identified the qualitative characteristics of the conceptual framework of accounting; the characteristics of accounting information that distinguish better (more useful) information from inferior (less useful) information for decision-making purposes. The primary qualitative characteristics are relevance and faithful representation. of accounting information that distinguish better (more useful) … Read more

Reclassification adjustments

Reclassification adjustments are amounts reclassified to profit or loss in the current period that were recognised in other comprehensive income in the current or previous periods.[IAS 1 92]

Recycling (the reclassification from equity (through other comprehensive income) to profit or loss)
Recycling is the process where gains or losses are reclassified from equity to profit or loss as an accounting adjustment. In other words gains or losses are first recognised in other comprehensive income and then in a later accounting period also recognised in the profit or loss. In this way the gain or loss is reported in the total comprehensive income of two accounting periods and in colloquial terms is said to be recycled as it … Read more

IAS 34 Interim financial statements

IAS 34 Interim financial statements provide all there is to know for producing Interim financial statements, what, where, when and what is in them.


IAS 34 prescribes the guidelines for an entity regarding the preparation of interim financial statements by providing information about the minimum contents of interim financial reports along with the recognition and measurement principles for such financial reports. These interim financial reports will provide the most recent activities, circumstances and financial affairs of the reporting entity


IAS 34 does not define, which entity is required to publish the interim financial reports, the time period after the end of interim period within which these financial reports should be published and how frequently these should be published.Read more