Professional Documents
Culture Documents
IFRS 2
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
IFRS 2 contains specific requirements for: Equity-settled (shares, share options, warrants) Cash-settled (share appreciation rights) Compound instrument containing both equity and cash-settled components (bifurcate)
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
Compound instrument if employee has choice of settlement: - liability component measured first - balance is equity component
Generally liability classified unless Case Study 1: Choice of settlement award it is a tandem
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
IFRS and U.S. GAAP Differences: Share-Based Payments: Grant date and Scope
IFRS 2 Grant date Date the entity and employee agree to a share-based payment arrangement and have a shared understanding of the terms and conditions of the arrangement FAS 123R Grant date Date the employer and employee have a mutual understanding of the terms and conditions of the award and the employee begins to benefit from or be adversely affected by changes in the employers share price Scope Applies to share-based payment arrangements with employees and is applied by analogy to share-based payment arrangements with non-employees
We would expect a high degree of correlation between the calculation of the award and the share price for a transaction to be classified a share-based payment
A transaction that is based, at least in part, on the price of an entitys shares would be considered a share-based payment. This threshold does not require a high degree of correlation between the calculation of the award and the share price, unlike IFRSs
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
Potential application to schemes put in place by entities to comply with government policies e.g., Black Economic Employment (BEE) schemes in South Africa
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
Graded vesting Each tranche is considered separate award Results in front-loading recognition (FIN 28)
Graded vesting Accounting policy decision (if vests based on service) to use either (a) straight-line method or (b) FIN 28 approach
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
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FAS 123R Improbable Probable modifications (Type III) Treat original award as though would not have vested No floor
For modifications from cashsettled to equity: Compare the fair value of the instrument immediately before modification to the fair value of the modified award and recognize any incremental compensation cost
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
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Do not remeasure deferred tax asset. Assess for recoverability using more-likely-than not framework in FAS 109 If intrinsic value at settlement is less than grant-date fair value, deficiency can be offset against prior excess amounts within APIC
2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.
FOR INTERNAL USE ONLY.
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