Accountingby Reshielize | IFRS 2 Share-basedpaymentThe essential guide(updated March 2009)An overview of IFRS 2Share-based paymentShare-based payment awards (such asshare options and shares) are a key issuefor executives, entrepreneurs, employees,and directors. This guide gives an overviewof IFRS 2 Share-based payment (IFRS 2 orthe Standard) and related interpretationsIFRIC 8 Scope of IFRS 2 and IFRIC 11 GroupTreasury Share Transactions. A glossary ofterms relating to share-based payments isat the end of this document.Background to IFRS 2IFRS 2 was issued in February 2004 andprescribes the measurement andrecognition principles for all share-basedpayment awards. IFRS 2 applies totransactions with employees and thirdparties, whether settled in cash, otherassets (relatively uncommon, but forexample, gold) or equity instruments.The Standard was recently amendedwith respect to vesting conditions andcancellations which became effective on1 January 2009. The InternationalAccounting Standards Board (IASB) iscurrently drafting an amendment withrespect to group cash-settled awards.2IFRS 2 is one of the more challengingaccounting standards since it involvescomplex valuation issues and, as describedbelow, is sometimes counter-intuitive. Thegeneral principle of IFRS 2 is that an entityrecognises an expense for goods or services(or an asset, if the goods or servicesreceived meet the criteria for recognisingan asset) with the credit entry rec ...
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