FRSC Issues for Comment IASB Proposed Guidance on Group Cash-settled Share-based Payment Transactions
The Financial Reporting Standards Council (FRSC) has issued an Invitation to Comment on an IASB Exposure Draft (ED) of proposed amendments to IFRS 2, Share-based Payment, and IFRIC 11, IFRS 2–Group and Treasury Share Transactions: Group Cash-settled Share-based Payment Transactions.
The proposals respond to requests for guidance on how a group entity that receives goods or services from its suppliers (including employees) should account for the following arrangements:
- Arrangement 1 – the entity’s suppliers will receive cash payments that are linked to the price of the equity instruments of the entity
- Arrangement 2 – the entity’s suppliers will receive cash payments that are linked to the price of the equity instruments of the entity’s parent.
Under either arrangement, the entity’s parent has an obligation to make the required cash payments to the entity’s suppliers. The entity itself does not have any obligation to make such payments.
The proposed amendment to IFRS 2 clarifies that IFRS 2 applies to arrangements such as those described above even if the entity that receives goods or services from its suppliers has no obligation to make the required share-based cash payments. The proposed amendment to IFRIC 11 specifies that the entity should measure the goods or services in accordance with the requirements for cash-settled share-based payment transactions.
The FRSC Invitation to Comment and the IASB ED may be downloaded from the Philippine Financial Reporting Standards (PFRS) website, within the PICPA website (www.picpa.com.ph). The IASB ED may also be downloaded from the IASB website (www.iasb.org).
The FRSC invites comments on the IASB ED by March 3, 2008 to enable the Council to consider and include comments from Philippine respondents in its response to the IASB.