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Section 7300: Share-based Payments

International Financial Reporting Standard 2
Share-based Payment

1. First Version of IFRS 2
"Share-based Payment" issued in February 2004

2. Amendment
January 2008, Vesting Conditions and Cancellations

[U.S. GAAP Codification Topic]
718 Compensation - stock compensation
718-10 Overall
718-20 Awards classified as equity
718-30 Awards classified as liabilities
718-40 Employee stock ownership plans
718-50 Employee share purchase plans
505-50 Equity-based payments to non-employees

[U.S. GAAP before the Codification]
APB 25, October 1972, Accounting for Stock Issued to Employees, Superseded by SFAS 123(R) in 2004
SFAS 123, October 1995, Accounting for Stock-Based Compensation
SFAS 123(R), December 2004, Share-based Payment
AICPA SOP 93-6, Employers' Accounting for Employee Stock Ownership Plans

3. Share-based Payment Transaction
(1) Equity-settled share-based payment
--> The entity receives goods or services,
in exchange of the entity's own equity instruments
(2) Cash-settled share-based payment
--> The entity receives goods or services,
in exchange of cash or other assets
--> The amounts are based on the price of the entity's equity instruments

4. Recognition
Goods or services received are recognised
--> when the entity obtains the goods or services
Increase in equity: for equity-settled share-based payment
Increase in a liability: for cash-settled share-based payment

5. Equity-settled Share-based Payment
Goods or services received are measured
--> at the fair value of goods or services received
If the fair value of goods or services cannot be estimated reliably
--> goods or services are measured at the fair value of the equity instruments granted

6. Cash-settled Share-based Payment
Goods or services received are measured
--> at the fair value of the liability incurred

The fair value of the liability is measured
--> at the end of each reporting period and at the settlement date

Change in fair value is recognised in profit or loss

7. Share-based Payment with a Choice of Settlement
Accounted for (1) and (2):
(1) cash-settled share-based payment
--> to the extent that the entity has incurred a liability
(2) equity-settled share-based payment
--> to the extent that no liability has been incurred

Measurement of goods or services
in equity-settled share-based payments to employees

[IFRS 2.11] Measure at (1)
(1) fair value of the equity instruments granted.

[ASC 718-10-30-2] Measure at (1)
(1) fair value of equity instruments issued.

Measurement of goods or services
in equity-settled share-based payments to non-employees

[IFRS 2.10] Measure at (1)
(1) fair value of the goods or service received.

If (1) cannot be estimated reliably, measure at (2)
(2) fair value of the equity instruments granted.

Equity-based payments to non-employees
[ASC 505-50-30-2] Measure at (1) or (2), whichever is more reliable:
(1) fair value of consideration received.
(2) fair value of equity instruments issued.

Fair value of equity instruments granted

[IFRS 2.16] Measure based on (1) if available
(1) market prices

If (1) is not available, use (2) to estimate fair value
(2) a valuation technique

[IFRS 2] No exception for nonpublic entities.

[ASC 718-10-30-6] Fair value is estimated based on share price, expected volatility, and other factors.

[ASC 718-10-30-20]
If (1) cannot be estimated, nonpublic entities can use (2):
(1) expected volatility of its share price
(2) historical volatility of industry sector index --> calculated value

Nonpublic entities: Cash-settled share-based payment

[IFRS 2.30] Measure the goods and services received at (1)
(1) fair value of liability

[IFRS 2] No exception for nonpublic entities.

[ASC 718-30-30-2] In measuring liabilities from share-based payment arrangements, nonpublic entities have a policy decision of (1) or (2):
(1) measure at fair value
(2) measure at intrinsic value

Employee share purchase plan (ESPP)

[IFRS 2] No exception for employee share purchase plans.
[ASC 718-50-25-1] Employee share purchase plans are noncompensatory if certain conditions are met.

Graded vesting

[IFRS 2.IG11] Each installment is treated as a separate grant.

[ASC 718-10-35-8] Award with a graded vesting schedule of service conditions
A choice of (1) or (2):
(1) Treat each vesting portion as a separate award and apply straight-line basis.
(2) Treat the entire portion as one award and apply straight-line basis.









Index of IFRS Financial Reporting Textbook


   IFRS 1 - IFRS 9
IFRS Overview
IFRS 1: First-time adoption of International Financial Reporting Standards
IFRS 2: Share-based payment
IFRS 3: Business combinations
IFRS 4: Insurance contracts
IFRS 5: Non-current assets held for sale and discontinued operations
IFRS 6: Exploration for and evaluation of mineral resources
IFRS 7: Financial instruments: disclosures
IFRS 8: Operating segments
IFRS 9: Financial Instruments






U.S. GAAP by Codification Topics 
 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales





 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock 

 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  





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