IFRS 2 Fair value of equity instruments granted

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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.

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Valuation techniques used under the three valuation approaches

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Valuation techniques used under the three valuation approaches is a complete overview of valuation techniques useable under IFRS 13. The following are examples of different valuation techniques used under the three valuation approaches (Market approach, Income approach and Cost approach), and examples of common usage of those techniques.

Market approach

Technique

Examples of common usage

Quoted price in an exchange market

Equity securities, futures

Quoted prices in dealer markets

-On-the-run US Treasury notes

-To-be-announced (TBA) mortgage- backed-securities

Market multiples derived from a set of comparable assets (e.g. a price to earnings ratio expresses an entity’s per-share value in terms of its earnings per share) or transaction price paid.

Unlisted equity interests s

Matrix pricing

Debt securities similar

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