ACCA P2 考試：IFRS 2, SHARE-BASED PAYMENT (Part 2)

EXAMPLE 1

A company issued share options on 1 June 20X6 to pay for the purchase of inventory. The inventory is eventually sold on 31 December 20X8. The value of the inventory on 1 June 20X6 was $6m and this value was unchanged up to the date of sale. The sale proceeds were $8m. The shares issued have a market value of $6.3m.

How will this transaction be dealt with in the financial statements?

Answer

IFRS 2 states that the fair value of the goods and services received should be used to value the share options unless the fair value of the goods cannot be measured reliably. Thus equity would be increased by $6m and inventory increased by $6m. The inventory value will be expensed on sale.

PERFORMANCE CONDITIONS

Schemes often contain conditions which must be met before there is entitlement to the shares. These are called vesting conditions. If the conditions are specifically related to the market price of the company's shares then such conditions are ignored for the purposes of estimating the number of equity shares that will vest. The thinking behind this is that these conditions have already been taken into account when fair valuing the shares. If the vesting or performance conditions are based on, for example, the growth in profit or earnings per share, then it will have to be taken into account in estimating the fair value of the option at the grant date.

EXAMPLE 2

A company grants 2,000 share options to each of its three directors on 1 January 20X6, subject to the directors being employed on 31 December 20X8. The options vest on 31 December 20X8. The fair value of each option on 1 January 20X6 is $10, and it is anticipated that on 1 January 20X6 all of the share options will vest on 30 December 20X8. The options will only vest if the company's share price reaches $14 per share.

The share price at 31 December 20X6 is $8 and it is not anticipated that it will rise over the next two years. It is anticipated that on 31 December 20X6 only two directors will be employed on 31 December 20X8.

How will the share options be treated in the financial statements for the year ended 31 December 20X6?

Answer

The market-based condition (ie the increase in the share price) can be ignored for the purpose of the calculation. However the employment condition must be taken into account. The options will be treated as follows:

2,000 options x 2 directors x $10 x 1 year / 3 years = $13,333

Equity will be increased by this amount and an expense shown in profit or loss for the year ended 31 December 20X6.

CASH SETTLED TRANSACTIONS

Cash settled share-based payment transactions occur where goods or services are paid for at amounts that are based on the price of the company's equity instruments. The expense for cash settled transactions is the cash paid by the company.

As an example, share appreciation rights entitle employees to cash payments equal to the increase in the share price of a given number of the company's shares over a given period. This creates a liability, and the recognised cost is based on the fair value of the instrument at the reporting date. The fair value of the liability is re-measured at each reporting date until settlement.

EXAMPLE 3

Jay, a public limited company, has granted 300 share appreciation rights to each of its 500 employees on 1 July 20X5. The management feel that as at 31 July 20X6, the year end of Jay, 80% of the awards will vest on 31 July 20X7. The fair value of each share appreciation right on 31 July 20X6 is $15.

What is the fair value of the liability to be recorded in the financial statements for the year ended 31 July 20X6?

Answer

300 rights x 500 employees x 80% x $15 x 1 year / 2 years = $900,000

DEFERRED TAX IMPLICATIONS

In some jurisdictions, a tax allowance is often available for share-based transactions. It is unlikely that the amount of tax deducted will equal the amount charged to profit or loss under the standard. Often, the tax deduction is based on the option's intrinsic value, which is the difference between the fair value and exercise price of the share. A deferred tax asset will therefore arise which represents the difference between a tax base of the employee's services received to date and the carrying amount, which will effectively normally be zero. A deferred tax asset will be recognised if the company has sufficient future taxable profits against which it can be offset.

For cash settled share-based payment transactions, the standard requires the estimated tax deduction to be based on the current share price. As a result, all tax benefits received (or expected to be received) are recognised in the profit or loss.